Cast your mind back to 10 years ago. Can you recall seeing pop up shops in Australia? I can’t. Aside from the odd plant shop offering to sell pine trees at Christmas time, I can’t quite recall the phenomena. And when you think about it, the prevalence of pop up shops tells us quite a bit about current levels of consumer confidence.
A pop up shop is all about being temporary. It’s where an entrepreneur makes use of an empty shop (or venue) for a short period of time to sell their product or service. It could (for instance) be a well known designer selling clothing seconds, an enterprising couple that have imported some home wares from an exotic location, or even a food van that has parked near a local football field. The sale may be open for a month, a week, or just for the lunch time rush.
The attraction for the entrepreneur is that they are not committing to a long term lease, the rent is likely to be cheap, and finally, it’s a good way to test markets and launch new products. It is this last point which is interesting, and what I’d like to draw you back to my original question: whether you recall pop-up shops having the same prevalence 10 years ago as they have today.
A friend recently asked – why do people worry about the stock market so much? Why is there such a panic when it falls? My reply was that to some extent it represents people’s savings and affects their confidence. I added that the data that fuels market movements can be forward looking and give you tips on how the economy is faring. He replied that those movements don’t affect him. He runs a manufacturing business, he’s in the “real economy”, and believes he’s never been busier. He’s been working from 3am to 7pm in recent weeks, trying to complete orders.
At this point I asked why he doesn’t add more staff, increase capacity etc… he said he wasn’t sure about the pipeline of further work. This is my point – consumer and business confidence play a significant role in our economy. If his clients aren’t sure of their direction, how can he be sure? Same with a pop-up shop, it might be successful in what it does – but for how long?
Pop-up shops are more prevalent now in part because of decreased business and consumer confidence. 10 years ago we were participating in the commodities boom. Unemployment was around 4.5%, in an environment where anything under 5% suggested the economy was at capacity. Confidence was in abundance, businesses were happy to commit to leases and hire staff.
While my friend is busy, his uncertainty of future orders is preventing him from committing to hiring more staff. His clients will be more confident to commit when they too have greater business certainty.
Government (and opposition parties) have a role to play in boosting confidence. When Government (Federal, State, or Local) is clear on their direction and spend, it filters down to each and every one of us. Australia’s growth rate has slowed to a “new normal” of 2%. Unemployment this week has managed to fall to 6.2%, and 17,000 new jobs were added. If we can boost confidence, my friend might hire a new staff member, and in turn take another Australian off the dole queue, and decrease the unemployment rate.
Then perhaps we’ll see a few more of those pop up shops convert to long-term leases.
