The Effect of Pop-Up Retailing on Customer Omnichannel Shopping: Evidence From a Quasi-Field Experiment

Abstract

With the increasingly uncertain future of brick-and-mortar (B&M) retailing, companies are exploring new ways to avoid the high costs associated with maintaining traditional, full-service retail stores. One solution, pop-up stores, has gained popularity in recent years. This paper uses empirical evidence from a leading U.S. retailer to examine the value of pop-up retailing. Specifically, we focus on pop-up stores operated by a traditional multichannel retailer over 3 years and examine their impact on customer demand and order fulfillment in the short run and long run. We further evaluate whether the impact of a pop-up store is sensitive to its operational terms, including whether it is a first-time or returning “pop-up” to a market region and the duration of the store. Using a quasi-field experiment, we find that having pop-up stores leads to an expansion in the overall demand during and after operations, indicating a spillover effect that extends beyond a pop-up store's limited operational window. From an operational perspective, our empirical evidence suggests that customers migrate from the online channel to pop-up stores for faster demand fulfillment. Moreover, recurring pop-up stores are slightly less effective at stimulating local demand than first-time pop-up stores. Finally, results reveal that pop-up stores are not as effective as permanent stores in generating demand; however, the flexibility in operations still makes pop-up stores an attractive physical retail format, especially for exploring markets with modest potential.