As retailers and malls around the world have come under pressure due to the growth of online shopping (at an annual rate of 25% in recent years) and with changing consumer shopping habits reshaping the retail world, shopping malls are having to re-invent themselves not only in their appeal to shoppers but in their dealings with their tenants.
At the recent Annual Congress of the South African Council of Shopping Centres (SACSC), speakers focused on the new relationship between tenant and landlord and the need for greater flexibility when it comes to supporting and assisting struggling tenants.
As more and more shops become vacant and traditional rental income comes under pressure, the dynamics of dealing with tenants is changing. No longer is it a case of a ‘take it or leave it’ attitude to high rentals and unreasonable terms but rather a more flexible approach taking into account the challenges that retailers, especially small businesses face.
As shopping malls scramble to fill their vacant shops with ‘pop-up’ concepts or bring in special marketplace promotions to entice shoppers, they need to spare a thought to those long-term tenants who may feel the effects of competing with short-term retailers who don’t have to contend with on-going and often crippling running costs.
Shopping malls have long had the reputation of shunning small independent businesses in favour of the bigger brands but as consumers look for unique products and services, offering small brands the opportunity to test out retail strategies without the long-term commitment and with lower rents can benefit malls in the long run. Giving entrepreneurs and new franchise brands the opportunity to go from temp to permanent to see if the market and space are viable would really help build a new retail experience.
The solution lies, for both the retailer and the landlord, in the delicate balance of embracing online with bricks and mortar, working with and nurturing small businesses and finding solutions that produce a win/win for both sides.