The next few months will be a challenging time for retailers opening up their stores again, but it can also be a real opportunity to both improve things and approach business in a whole new way.
The topic of rents has always been a tricky proposition for both retailers and landlords, and lockdown hasn’t helped matters, but already it has paved the way for multiple approaches in areas like click and collect and online shopping.
That pivot means retailers will be evaluated differently by landlords not just for rents, but for entire portfolios.
Operating on turnover rents is still a niche prospect, but landlords are becoming more sophisticated with their methods and becoming aware of how retailers are fulfilling orders through online and other methods.
In this case, it is letting retailers keep their heads above water in a difficult period while prepping for good times ahead.
“What landlords are saying is if you’re asking me to help you out in the bad times, what’s to say I shouldn’t be able to say you can help me out when things are better,” John Hogan, managing partner at Leman Solicitors, said.
“There will have to be an acknowledgement that business has changed and that people want each other to be successful.”
This would require retailers to share commercially sensitive information, which would make most businesses baulk, but what it really opens up is a level of honesty and understanding between the two parties that can help them work together and grow.
The key to that is for retailers to digitalise their information not just for safekeeping and easy access, but develop a detailed analytics system.
Leman Solicitors has worked with its sister legal technology company LexTech to develop an AMP (asset management platform) allowing businesses to do just that. The old method of keeping papers in boxes or filing cabinets or basic spreadsheets is long over.
“[Finding information that way] should be the difference between three clicks and three days,” he said. “You’re talking about being able to do comparative analysis, as all retailers are looking to see what the most efficient model is for a store.”
“If you can get up-to-date, relevant data extracted, it means you can make better-informed decisions around whether you move on, or whether you change a unit in the same centre.”
Also, revealing this information to landlords has another benefit: it allows them to gain a clearer picture of the ebbs and flows of each business in its area.
That isn’t just to figure out turnover, but to maximise footfall and give consumers new reasons to visit or return to the area.
As an example, Hogan mentions a well-known shopping centre asset it works with where the landlord has introduced a fund for Christmas advertising. It’s done on the basis that all tenants contribute to it with the understanding that the landlord is strategically marketing the centre.
Instead of putting these plans down to general trends like holidays or events, landlords can pinpoint specific weeks and periods to maximise outcomes and plan for them.
“The landlord can only do that when they have good intelligence of what works and what doesn’t,” he said. “By landlords gathering the information and using it strategically to support their tenants is a win-win.”
The major factor is that such measures require substantial trust from both parties. Hogan mentions that both landlords and retailers need to work together and have open discussions around what they’re trying to achieve.
Once you’ve developed that trust, you can make proposals safe in the knowledge that everyone is on the same page.
For retailers, Hogan recommends three things: to know where your data is and have it in one place, digitise it and make sure it’s searchable and extractable.
He also recommends appointing a champion within the business who will take responsibility for the project. Someone who knows the business well can own the project and take the credit when it’s successful.
It’s a project that may take months, but the end result will help fast forward your business, Hogan said.
“It can be your go-to resource for the next decade, and it can help you plan things like voids or break options or moving units months and years out instead of panicking with just weeks to go,” he said.
“Early useful analysis and having warning systems can be fantastically useful for both the landlord and tenant relationship.”