Top tips for dealing with landlords

by Vaughan Strawbridge, Deloitte

TMA Australia held its ‘Maximising Real Estate in a Retail Turnaround’ event in Sydney on 21 August.

The discussion panel focused on the retail sector and real estate, and produced these top tips for dealing with landlords:

1. Keep it out of the media

2. Communication with Landlords early is critical – they can’t help solve for problems that they don’t know, there may be other locations within the centre to move into, the Landlord may have other retailers that can go into the existing store and allow an early exit avoiding costs

3. View the Landlord as running a business, any request for a reduction in rent will need to be supported by a potential hand back of valuable space, moving to a new location within the centre as the Landlord seeks to reshape the mix within their centres to drive dwell time and foot traffic

4. Be prepared to walk! Don’t just threaten to walk and not carry through when negotiating

5. A turnaround story needs to be supported by a brand and sales growth strategy

6. Take a portfolio approach when negotiating rent reductions or early exits, as you are likely to have the same Landlord across multiple centres

Hosted by Deloitte, Matt Hudson National Director, Head of Retail Leasing, Cushman & Wakefield, Tim Fawaz Chief Financial Officer at Specialty Fashion Group and Jack Hanrahan Managing Director, Retail Genetics participated in a retail discussion which was moderated by Janna Robertson, Deloitte.

Key takeaways from the event are:

• Loyalty programs – build a great loyalty program and it will pay you back tenfold (90% of Greencross’s sales come from members)
• A ‘bricks and mortar’ footprint is still a cost-effective channel to customers, but getting the right mix of stores is critical
• An online offering to support the bricks and mortar strategy is critical
• Greater flexibility in leases is working its way into the market, with shorter terms and a propensity for some retailers to ‘try before you buy’
• Know your portfolio – demographics, and profiling in catchment areas, avoid cannibalisation, track key metrics and act quickly