Matchmakers

Appear Here And How Brands Can Rethink Physical Retail

The year was 2012 and Ross Bailey, now CEO of Appear Here, had a simple idea. It was the Queen’s Diamond Jubilee, and he wanted to sell some pretty cool t-shirts he had created to commemorate the occasion.

There was only one problem: It was incredibly difficult to find a storefront in the vicinity of the festivities. Well, to be precise, it was incredibly difficult to find storefronts in the vicinity of the festivities that were willing to lease space to Bailey for just a few weeks. As an advertising student, Bailey’s interest was to make a few pounds by leveraging that momentuous national occasion to sell a few shirts — not make a long-term commitment to become a shopkeeper.

He wasn’t the only one having this problem — classmates, friends and fellow entrepreneurs, all with the same idea, were looking for spaces on High Street in London and were also coming up short, Elizabeth Layne, CMO of Appear Here, told Karen Webster during this week’s Matchmaker Is In conversation.

“Then, one day, [Bailey] got a phone call from Under Armor, who had been searching for a short-term store location for the Olympics,” Layne said. “And when he stopped to consider why a kid in his twenties was getting a call from a marketing lead at Under Armor, he realized that there was something to the concept of trying to find spaces to create specific moments.”

And so, the idea for Appear Here was born — a platform that matches landlords with vacant physical retail storefronts in high traffic locations to brands that wanted to rent that space on a short-term lease to launch a new product, test out a new retail concept or simply hawk cool t-shirts to commemorate a special occasion.

After Bailey committed fully to his entrepreneurial venture, one might expect the first thing he might do is to hire a tech team or an advisor to help him realize his goal of becoming the Airbnb of commercial real estate. That would be an incorrect assumption. Instead, Layne said, Bailey hired a designer, a photographer and a copywriter and set out to build a brand of his own — something that he felt was essential to sell to a market that was as outdated as it was unapproachable: commercial real estate.

Since then, Layne said that Appear Here has expanded beyond London to other “fashion capitals” — Paris and, more recently, New York — and has connected some 70,000  brands, designers and creative entrepreneurs with physical retail spaces that landlords are willing to rent to them on short-term leases. Brands that are also household names have made the list: Spotify, Lyst, Made.com, Google, Apple, Net-a-Porter and Coca-Cola, just to name a few. In the last 12 months, Appear Here has launched over 3,000 stores in London alone.

And those kinds of numbers, Layne told Webster, are pretty amazing, since at first, the concept was a tough sell to the supply side of the platform: the landlords.

A Hard Initial Sell

Retail landlords, Layne noted, don’t come out of the box ready to plug into a short-term rental platform. In fact, the hardest part of the platform, she said, is getting enough spaces in the places where brands want to be. Part of convincing landlords to sign on is an image problem for short-term rentals, Layne explained, and a belief that it is better to be vacant in a prime retail location than to risk lowering the value of the property with a series of short-term leases.

And part of it is the hassle factor associated with short-term rents. Landlords, Layne said, historically find it hard to get an ROI negotiating a lease that lasts a month and for which the time to negotiate terms can be as long — or longer — than the term of the lease itself, which isn’t good news for either party.

For Appear Here to make sense for landlords, they had to remove the hassle factor. And, Layne said, they have: An average Appear Here booking takes three to six days. The platform also reduces legal fees by using a standard license agreement and enabling online rent payments via credit card or bank transfer. Appear Here makes money by taking a piece of the value of the lease when a deal closes. Layne said that, on average, users rent for a few months, although some rentals have gone on for as long as three years or for as little as a day.

The trick in enlisting landlords on the platform, she revealed, is that there is not a trick, unfortunately. There is working steadily and consistently in new markets they enter to help bring landlords on a platform that shows off the obvious value.
 
The Benefit for Brands

In an era where physical retail is often labeled as dying, it might be surprising that brands are looking to break into the real world of physical retail at all.

But, Layne said, the picture is more complex. The old way of doing brick-and-mortar retail is an unattractive model in many ways, but that doesn’t mean doing business in the real world is unattractive.

“Newer brands are hesitant to take on high fixed [retail space] costs; venture-backed businesses don’t want it on their balance sheet. A pop-up or a temporary engagement lets them see whether the format will work for them and build out a business case for the longer term.”

In other words, short term is a bit of an insurance policy for brands willing to experiment, because the experiment doesn’t have to be a years-long investment in a concept that may not pay out.

“What we are most excited to see is our ability to help brands figure out how to make physical space a variable cost, not a fixed cost,” Layne emphasized. “So they are using physical retail as a way to test a market or launch a product. We’re also seeing big brands booking spaces to really try out new forms of experiential marketing.”

That includes Coca-Cola celebrating the anniversary of the curved bottle with a pop-up soda parlor in London, where they handed out free drinks for a month. Or Apple and Net-a-Porter creating exclusive shopping events in unique retail locations for influencers only. Or Hunter Boots taking pop-up slots in underground stations to create live billboards instead of retail locations.

“Brands are moving dollars away from traditional marketing into experiential retail as a form of marketing, and Appear Here makes doing that much simpler.”

Building Toward Ignition

As of now, Layne noted, Appear Here has focused on prime retail spaces in fashion and retail capital cities — hence London, New York and Paris. Those spaces, she said, are heavily vetted, because it’s not just about offering a place to put a pop-up; it’s about the right, unique space. The platform not only offers the ability to connect, but also realizes some data about certain areas and locations.

And while often the pressure is to keep adding cities to the count, Layne explained that Appear Here is selective about when and how it pops up itself.

“We want to saturate the cities we are in, in terms of number of places, before moving on to the next place. It is important for us not to scale super quickly, but to really hone in on cities and build real relationships there with the landlords and the potential tenants in an area.”

Which isn’t to say they don’t keep their ears open for demand. These days the calls are coming most loudly from L.A., San Francisco, Miami and Chicago. Karen Webster noted Boston was being unjustly overlooked.

And while their platform offers a vehicle by which they could move into an increasing array of services — and they do offer concierge features for some of their brand partners — she says mostly their focus is on their core business, because there remains so much need. And that means they have a lot of work to do to continue to try and meet it.

“Our job is to be smart about scaling both sides of a platform always. When we enter a market, before we start shouting from the rooftops … about [a] business, we are in beta and working to sign up landlords and places. We have very definite targets around that before we move on to advertising our services to possible users.”

It’s not easy work, Layne noted, but it is getting easier as landlords are signing on more — and bigger players are not just using the service, but investing in it.

Retail is a changing world, and what the Appear Here platform does is give physical retail a new way to change along with it.

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