Renegotiating your lease
By Tony Ozelis

Part 2 - Reviewing your own location needs

It may seem like some pretty simple questions, but one of the first things you need to ask yourself is; does your present location still work for you? Is it still where you want it to be? And does it still meet the needs of your customer? Trade areas are living and breathing entities and people move in, trade up and move on. It’s a fact of life – especially in retailing. So you need to ask yourself; does that space you picked five or ten years ago, still suit all of your needs today? Where are your customers coming from…today?

A simple method that many larger retailers use to determine customer distribution is quickly asking for the customer’s zip code at the point of purchase. (And you always wondered why they did this). How you keep and process this information is very much up to you. Although many modern POS systems have this capability, placing a good old marble composition book next to the register works just fine. Just because folks walk in your door, doesn’t mean you’re convenient to them. Find out, first and foremost, where they live and how they got to you.

Next, look at your physical plant (OK…that’s corporate weasel-speak for your store, we’re sorry) and ask yourself:

  • Does the store layout well for you and your customers?

  • Do you have too little (or too much) space?

  • Does it still fit your needs or have they changed over time?

  • Have the co-tenants in the shopping center changed?

  • If the anchor store has closed or changed, does it help or hurt your business?

  • Have your customers changed?

All these things can translate to black ink on your bottom line and the real question should always be…how’s your bottom line? Let’s face it, few of us are in business just for the fun of it. And although most folks are change-aversive, are you making the money you feel you should be making where you are?

It sounds simple, but staying somewhere just because you’re there, could be the worst business decision that you can make. Increasing your business and profitability while lowering your occupancy costs is never a bad thing. There are instances where the retailer proudly displays the sign: “Same location for over 40 years!” Trust me; they own the building. There is no status in paying above market rents just to have the same location for over forty years.

If, after some careful and honest scrutiny your business, your space still works for you, great…now comes the fun part.

Next: Part 3 - Determine Fair Market Value

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