Ahead of a panel on Rethinking Retail Real Estate, the retail startup's CEO, Mohamed Haouache, lends his insights on enabling short-term retail for brands like Hermes, Google, L'Oreal and more, as well as on China's fast-growing place in the future of retail (physical and otherwise)

Online shopping has become more and more popular, and is set to continue its meteoric sales boom; however, consumers are still eager to experience a brand and product in a tactile way. Even in China, where ecommerce giants like Alibaba dominate, physical retail has still proven desirable amongst consumers. 

Storefront, the world’s largest open share marketplace, acts as the intersection of retail, real estate and consumer needs, making it easy for retailers to create pop-up stores where the primary goal is not simply to sell a brand and its products, but invite consumers to experience the brand, selling consumers on a brand instead.

Ahead of speaking on the Rethinking Retail Real Estate Panel, part of New York Innovation Week, Storefront CEO and co-founder Mohamed Haouache spoke to PSFK about how pop-ups can engage customers of the future and allow retailers to penetrate new markets, particularly those found in Asia.

PSFK: To start us off it would be great to hear about Storefront as a company and what kind of new things it's doing.

Mohamed Haouache: Our business model is a sharing economy marketplace in the mission of monetizing empty vacant space through technology. We work on one side of the marketplace with a lot of prominent registered brokerage firms and shopping mall owners, and on the other side, we've been able to fulfill the needs of fashion brands, ecommerce players, and entrepreneurs who want to head up physical spaces.

You mentioned you are the intermediary between the real estate, the brands and entrepreneurs. How much of a focus do you put on the consumer versus the client's needs?

We understand more or less where the clients of our retailers want to be, and it's driving our strategy. You can find all the top retail spaces in Le Marais in Paris or in Soho in New York, and in all the tier one retails streets in Hong Kong, Amsterdam, London, and so on. Clearly, the way we look at our client or users is through the focus of what the customers, or the client of our clients, is in need of.

We have also been developing a very strong footprint when it comes to [special events]. We are active during the Miami or Hong Kong Art Basel. We are very visible during Paris, New York, or Milan Fashion Week.

Storefront is expanding into places like Hong Kong. PSFK has been doing a lot of research in China and Asia retail. Those marketplaces must be really interesting, especially just because of their gargantuan online retail consumption. Do you think that those pop‑up stores are still absolutely necessary, then?

That’s a very good question. I actually spent a lot of time in Asia this summer, in Shanghai, just to educate myself on exactly how the retail market is structured. We have a team, and we are accessible today in Hong Kong, Singapore, Macau. We have two listings in Shanghai.

What's happening in China is quite interesting. They are moving into a cash‑free economy, which allows all the retailers and ecommerce players to have a unique set of data.

What I've also seen is that there is a boom when it comes to physical retail. Some e‑commerce players, the Alibabas, the Tencents, are getting more and more powerful, but they are not forgetting that physical retail is very important. You have very dynamic retail activity in Shanghai and you have a lot of pop‑up shops being set up by these online players. Alibaba is opening a lot of pop‑up stores in Asia, a lot of pop‑up stores in China. For them, it's a way to create online visibility and a strong market share.

The Chinese market is extremely competitive, and Chinese customers tend to get extremely bored very quickly. You can be an overnight success and be folded six months later. There is always this need to be unique. We have seen some kind of out‑of‑the‑box projects.

Recently, everybody has been talking Amazon automating retail spaces. In China, it's already the case. You see more and more physical retail spaces activated without any employees. This is something that is quite unique, and quite shocking to me. When you look at the way retail activity is set up, the Chinese markets are today dominated by Alipay or WeChat.

Everything is taking place through these two players, who are trying to dominate both online and offline markets. During my time there, I was learning every day. Everybody should be looking at China.

There were some places in China where I could not even pay with cash. That's kind of scary. They own a lot of data, and Chinese customers tend to be very open‑minded when it comes to privacy. They are not concerned about sharing a lot of data. They only want to pay through their smart phone.

Would you say that this is the future of retail, what is happening in China? Do you see other marketplaces following suit? I don't mean to shoe‑horn you into that answer, but what do you think the future of retail is?

The future of retail is going to be about data. In order to have that, you need to be able to creatively integrate retail space.

Today, from my point of view, I have the luxury of traveling the world, the only market where I've seen a vibrant retail scene, some creativity, and also a good economy was Asia. The retail activity and the shopping malls are still full. There is a drive, hunt and appetite for new concepts and new retail brands, which have not been in the US or in Europe.

To me, a lot of the future, when it comes to either ecommerce or physical retail, will come from Asia. I have absolutely no doubts about that. The problem when you are a French or US brand is to crack the system and find ways to enter the Chinese market or the Asian market. It's truly completely different.

The cycle of being fashionable and out‑of‑fashion is so short that the window of opportunity is quite limited, so investing heavily can be extremely risky. What we've seen, given our global footprint, is that a lot of brands want to set themselves up in Asia through pop‑up shops.

You have a lot of middlemen in Asia, just to set up in China. There's a high likelihood that your e‑commerce portal will take place through WeChat. You have a lot of middlemen for shipping your goods, selling or reselling, and this creates a lot of bottlenecks and headaches, unfortunately.

Storefront helps alleviate a lot of those difficulties I can imagine.

Storefront doesn't solve every problem [laughs]…but Storefront allows all the brands to at least have some stability. Being a success story in New York or Paris doesn't mean that you will be a success story in China.

In order to be adopted by Chinese customers, you need to leverage social media. You need to leverage some influencers who are very active on WeChat.

Paying for online advertising or even Facebook or Instagram doesn't work in China. You need to be able to source the topmost relevant influencers for your particular brand. You need for them to work with you and you need somehow to basically allow for these influencers to project your brand into the spotlight. It's not easy. I've seen a lot of brands try the Chinese market and fail.

How would you say that Storefront helps create an enticing customer experience in a temporary space? What kind of things do consumers want in these pop‑up spaces?

The truth is that pop‑up shops or short‑term retail is being used more and more as a media or marketing campaign. The biggest return on investment today is what we call our internal leader, return on communication. How much buzz, how much traffic do you generate out of your pop‑up shop? We've seen a high correlation historically between a brand setting up a pop‑up shop and its social media activity. That's something that is hard to quantify, but that has been extremely helpful for our clients.

Where we market ourselves today is that we make the booking of a retail space as easy as the booking of a hotel room. When a brand uses a traditional broker or is looking for a long‑term lease, it takes them the equivalent of 60 days to set up a retail space. With Storefront, brands can have their very own retail space set up in anywhere from one to 12 days.

It gives them the tools to be available in multiple neighborhoods in New York on a week by week basis to test new geographies. They can track their customers through some social media activity, and tell them that they are today in SoHo, and by tomorrow they will be in Harlem.


See part two of this interview here, and for more from Mohamed, come see him speak at the Rethinking Retail Real Estate Panel, part of New York Innovation Week, where leading real estate and development minds will discuss the value proposition of bricks and mortar retail and how  the way we think about stores is changing. tickets available here!