What: What counts as a sale differs if you are a brand or a landlord

Why it is important:  Department Stores are facing the same issue with their concessions: should the rent include the click & collect business?

Retail spaces rent calculation has been for long composed of a monthly fixed fee, completed by a variable indexed on the turnover. However, now that omnichannel is becoming the norm, accompanied by its manifestations such as click & collect or kerb side pickup, landlords are more and more willing to include turnover generated through this new channel in the calculation, an option that retailers do not want to discuss. Sephora and Everlane are cited in the article as extremely reluctant to do so, if not hermetic.

Landlord’s position is dual: on the one hand, they want to make sure that the stores are not used as warehouses, to guarantee the long-term value of the location, but on the other hand, they also want to maximise the immediate profit by increasing the rent level with any possible manner.

As a consequence, contractual discussions and negotiations on leases are becoming increasingly complex and long.

Retailers and Landlords Clash Over What Counts as a Sale

Related items:

• Is turnover rent the new norm for retail?
• A new rent model under consideration in UK malls