Procurement · 13 August 2015

Pop-up sector now worth £2.3bn to UK economy, but technology troubles restrict smaller retailers

Some 40 per cent of small retailers are unable to process card payments
Some 40 per cent of small retailers are unable to process card payments

The pop-up retail sector generated over £2.3bn in turnover during the past year, increasing from £2.1bn the same time 12 months ago. Total turnover in the sector grew by 12.3 per cent compared to the previous year, as the numbers of people visiting pop-ups rose and visitors’ average annual spend increased over £8 to £124.

According to a new report by the Centre for Economics and Business Research (Cebr) and EE, the UK now hosts 10,000 pop-ups and nearly half of consumers have visited a pop-up shop in the last 12 months. Businesses in the space now employ around 26,200 people. The growth of pop-ups transitioning into established retailers has helped support the increasing number of small retail businesses seen in recent years – up 3.2 per cent.

A concern highlighted within the research was that 30 per cent of retailers and food and accommodation service providers are unable to process card payments, which rose to over 40 per cent for small retailers.

More established pop-ups have begun to address the difficulties by adopting portable technology to give them easy access to the internet from different locations, providing a way to process card payments and update social media.

This hadn’t been the case for newer names, with a quarter of small retailer professionals saying they had lost sales because they didn’t have sufficient stock management systems in place.

Recent research from EE suggested that almost two-thirds of new businesses will begin life as a pop-up and this follow-up report indicated that while startups are a driver of the sector, the pop-up model is expanding – with established businesses, both traditional and online, launching a range of pop-ups alongside their other business activities.

For new retailers, one of the benefits of the pop-up method has been the chance to build a strong platform from which to attract further investment – particularly for those who have a low-level of startup capital. The report did though, warn of the increased competition for pop-up space, with premiums paid for the reduced risk of short-term rental agreements rising.

Rob Harbron, managing economist for Cebr, said: “Pop-up retail is continuing to become an increasingly viable platform for both people with new business ideas and for established businesses looking to engage with customers in new and innovative ways.”

At the same time, he said “without appropriate investment in technology, efficiently coordinating a range of platforms is becoming increasingly challenging for businesses”.

Lawrence Brand's Porterlight is one of the pop-up winners testing out EE's new offerings
Lawrence Brand’s Porterlight is one of the pop-up winners testing out EE’s new offerings

The value of the sector was evident within the report. While the value of pop-up sales increased by 12.2 per cent over the past year, the value of total UK retail sales (excluding fuel) rose by 1.1. per cent. The study also found that with the rising number of pop-up businesses, the number has probably fed through into the number of small retail businesses in the UK – increasing 3.2 per cent between 2013 and 2014. Pop-up offerings currently make up a small segment within the retail sector, but they’ve shown levels of growth only neared by internet retail sales in recent years.

Mike Tomlinson, director of small business at EE, said: “The sector’s growth is driven by retailers and brands of all sizes using pop-ups to create new experiences, products and locations for their customers.”

In an attempt to tackle the technology issues for small businesses, EE is launching Connected Retail, a range of 4G connected products to help temporary and permanent retailers. Businesses can have access to a 4G tablet, contactless iZettle payments device and POS software Shopwave.

Winners of the Space for Ideas competition run by retail space marketplace Appear Here will be the first to try out the offerings. Cargo bike builder Porterlight, 3D printed jewellery brand WonderLuk, ethical clothing brand Run&Fell and children’s clothing brand The Mini Edit will also receive a retail space in London for two weeks.

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Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.