Thank you to all commenters. I must agree with all comments from our retailers. I believe the majority of shopping mall landlords are ignorant and greedy. I think that what Peter was trying to say by beating about the bush using too many superflous words is this.. if we have a physical store, we need to get back to good old fashioned, friendly and genuine customer service. I love how the tech revolution has the retail world cycling back to basics in this sense.

Hi Peter,

I can't help but feel this has a definite 'Pro Landlord' slant to it. Certainly the supposition that retail is generating +5% growth annualy doesn't ring true to me, but more than that, so what? Why should the landlord be rewarded or judged on retail sales growth?

From my own experience, I have recently taken over a new store that had a fairly unreasonable (in my opinion) rent, so much so that it was a big loss maker for the company. We are coming off the back of a great year where me and my new team have done a great job of turning it around, in a year that the lease was up, in return, the centre originally offered me new terms which would have pretty much swallowed up all gains, and they justified this by use of my sales growth.

Again I repeat, so what if retailers are or aren't experiencing sales growth, the centres job, and the centres part of the equation isn't to boost my sales, that's on me, the retailer. The centres role in this is to maximise traffic, which my centre and a lot of centres aren't delivering at the moment. Why should I then not expect to pay less rent than my original lease when the traffic to the centre is down 3-4% regardless of what my door counts, basket sizes and conversion growths are?

I think that's the crux of the argument from a lot of retailers (At least the ones I know) is that centre performance has fallen away so retailers expect to then have rent relief, because in the past as performance has improved so has our rent.

Hi guys,
Landlords are greedy period. We sign contracts with percentage rent clause. When the market is up, we pay percentage rent based on sales but when the market is down and tough, the lanlords won't reduce the rent and threaten legal action etc. Landlords are in business I understand. They are also in business to make lots of money. But they can be unethical. I have been a tenant with 2 big landlords in a shopping centre. These guys are ruthless when it comes to securing their rent during slow periods. I have been thereatened to get my lights turned off, been verbally abused and told that they would take my house away. Needless to say I had enough. I seeked help from website here, lawyer etc but it was catch 22. To fight someone with deep pockets , you need deep pockets. I used media to get my word out there about high rents and Mia treatment and guess what. I was given a deal by them.

Question to Chief navigator...
1) What are the landlords doing to bring shoppers to the centres? What kind of entertainment or "physically immersive and human experiences" are the centre managers providing apart from a crusty old Santa Claus in December or a baby pagent here an there.
2)The suggestions sounds great and almost as creative as the title Chief navigator....can you give us all one example of what you mean?

It is easy and glib to say (in terms of rental costs) if you cannot stand the heat get out of the kitchen. We are talking about people/companies that have invested significant amounts of time and effort into establishing a business, walking away is an option that few can afford to do. Walk away to what? Would you ask a tradesman to give up his trade if he couldnt afford his tools? We cannot all sit on the sidelines and make smart comments from our lofty view point. Some of us have to withstand the constant grinding extortion otherwise these retail journalists/consultants would have nothing to write about.

I’m not sure if the article actually adds anything. It’s all about this; a retailer is interested in renting space and a landlord is offering it. If the parties can come to commercial terms, then the transaction will proceed. If not, then it will not. It implies the retailer knows what he/she is doing and the landlord is not opportunistic.

The difficulty is that greed, ignorance, stupidity, ego and many human foibles and frailties can all get in the way to success on both sides. Landlords were once in the business of selling retail space, but realised they must be in the business of retail. Retailers were once in the business of selling goods and services, now they must know the real estate business to survive.

Many shopping centres have priced themselves out of the market and guess what? retailers are staying away and those that are staying are driving harder bargains. Landlords are now at a slow moving cross-roads. They need to embrace the new reality of retail or face lots of empty shops and de-malling. Retailers are at a cross roads too. They need to embrace the new reality of technology and think about bottom line net profit that will include selected physical stores and virtual stores.

The market will adjust landlord and retailer expectations. History shows us that.

Stephen Spring
Australian Retail Lease Management

Simple as this:
(1) Retailers need to band together to drive-down the greedy overcharging from landlords.
(2) Retailers sign leases. .. These legally binding documents often carry the same moral bankruptcy as does many consumer style contracts.
(3) IE: Something one needs to sign to purchase something... But a contract of dozens of pages and 10,000 words plus. .. Absolutely an immoral disgrace!
(4) Banks' Internet Services, and mobile phone contracts, (and commercial leases), are some examples...

@Ines, your inability to understand what Peter is saying has little to do with the article. I suggest (and it's only the way I read your response) that you are stuck in the mind-set of many retailers and cannot why it's not the landlord's responsibility to generate the sales for the businesses in their properties. As a retail RE professional, I have recently had a constant stream of retailers expecting me to cut their rent, so they can afford to discount more, rather than giving some thought to a cohesive strategy on how they will improve the sales of the business through a mechnisim other than cutting margins. This action, ultimately, will only lead to further pain and a return to my office to request more assitance.

I don't see retailers asking to pay more rent when the market moves up during the course of their lease and sales are booming. I also don't see Owners getting any sympathy when they get their numbers wrong and can't service the debt in a shopping centre purchase. Why should it be any different when the shoe is on the other foot?

I could go on with this topic all day but if you need further explanation, see Dennis Price's excellent article from last week:

http://www.insideretailing.com.au/IR/IRnews/Retailer-v-landlord-let-the-battle-begin--4051.aspx

Good article. I think Peter's point is clear: Don't expect ongoing rental subsidies/reductions from landlords if you intend to carry on with "business as usual", obviously if "business as usual" was effective then you would need no such support. Instead rethink your business strategy to improve the overall engagement levels and dial up the customer experience in the store and then ask the landlords for a contribution to help you achieve this goal - if they can see that your proposal will draw experience-seeking hedonistic shoppers to the mall and will raise the benchmark for other retailers in the mall they will be more inclined to help. Landlords want to see innovation not bare-minimum.

Hi Peter, you artical "Suicidal Intentions" caught my eye simply because of the direct relevance it has to what I have just experience. But after spending a good 10 minutes actually reading and re reading it, seemed to lack any real substance. Your artical implys that you are on the side of the retailer and then sift your sympaty to the landlord. What is it that you are actually trying to say but did not say. Ending the artical with "Think about the changes you really need to make and then approach them to support you through the transition. You may be surprised at the result." to whom is this actually directed to the landlord or the retailer? Perhaps you should revisit this topic and my I suggest use more relavent information which would back your Title!
Otherwise a great topic. Ines