Negotiating rent on shop during Covid times?

Flailing

I've been looking for a retail unit to let for a while and have found the perfect place, it is slightly more expensive than I would like though. Do you think it is worth trying to negotiate lower rent with all that is going on at the moment? I can manage the rent as is but obviously would prefer it to be lower but I don't want them to think I'm a flake either. This place has been empty for the past 2 years at least so they don't seem to have people snapping their hand off for it. It's my first time renting a commercial property so I don't really know what is acceptable.

Darc19

So difficult.

Depends on your trade.

You could look at a small fixed rent and a percentage of turnover.

Don't get blinded into thinking it's right for you and then overpaying. Locations doing well are stores on main streets, retail parks and even business parks.

Places to avoid are shopping centres.

Find two other locations that are also suitable and trade them off with the favoured location to get the best deal.

jimmii

As mentioned above definitely avoid shopping centres! I've seen a few locations offering small rent plus % definitely an interesting option. Would be curious to see how the landlord would want to verify their cut though. Do you really want to be sharing full accounts with them?

A lot also depends on who owns it too. If its been vacant that long and the price is still high could well be a larger landlord who is waiting for the right person and not looking for any person just to get some money coming in for it. If that is the case then if you don't have a solid track record then you would probably need to sign a long lease to get much of a discount. Good chance you could get a reasonable rent free period instead of much of a discount.

On the off chance it is a small landlord then you would imagine they'll be a lot more flexible. One of our landlords has been amazing this year they approached us and said they didn't want us paying rent during lockdown that wad very surprising! Even after lockdown they said see how things go and we will see if its good enough to pay rent.

Personally I think it might be worth waiting a little while. Once the economic impact of this really kicks in, when government supports end, a lot of places may well have to close and more supply puts you in a better place to negotiate.

Flailing

Thanks for the replies. When I spoke to the agent I got the impression it is a small landlord, they bought the shop and the 4 apartments above.
I am thinking that myself about waiting a while to see what happens but then there is the question of how long to wait. There really aren't many places in my locality that fit the bill as well as this place does that aren't already taken so perhaps waiting would work best and I may have more choice.

Gloomtastic!

You should be asking yourself, do I really need a physical outlet? Can you sell online?

Walk around any shopping centre and main street and see how many outlets have not reopened since the end of lockdown. All small operators, like yourself, gone forever unfortunately.


If you really need a retail outlet to sell, if you can prove you have the money to pay the rent, then, I think, any landlord will bite your hand off. The landlord is probably making his money from the apartments and anything from the retail unit would be a bonus. Think of the price you were willing to pay and lower it by, at least 30% to start negotiations.

If they say no, then wait a while and see if other outlets become available in the coming months. I feel, unfortunately, that there will be a few.

jimmii

Definitely agree if you don't have to then probably don't. Retail is dam hard at the best of times and unless you've done it before then theres going to be more work than you imagine which will take you away from the actual job of running the business. Having said that since coming out of lockdown things have been pretty good despite our council doing their best to ruin things by creating "space for people" which turned out to be getting rid of parking with bollards to create walling space on the road no one ever uses.

Flailing

Gloomtastic! wrote: »

You should be asking yourself, do I really need a physical outlet? Can you sell online?

Walk around any shopping centre and main street and see how many outlets have not reopened since the end of lockdown. All small operators, like yourself, gone forever unfortunately.


If you really need a retail outlet to sell, if you can prove you have the money to pay the rent, then, I think, any landlord will bite your hand off. The landlord is probably making his money from the apartments and anything from the retail unit would be a bonus. Think of the price you were willing to pay and lower it by, at least 30% to start negotiations.

If they say no, then wait a while and see if other outlets become available in the coming months. I feel, unfortunately, that there will be a few.

I sell online already, the retail outlet would be in addition to that and is something that lots of customers have expressed an interest in.

jimmii

Flailing wrote: »

I sell online already, the retail outlet would be in addition to that and is something that lots of customers have expressed an interest in.

What customers say they want and what they actually want are two very different things. If you do go down this route then make sure you have a get out clause. What's your retail experience like? I've opened shops in the UK and Ireland so if you have any questions feel free to fire them my way happy to help if I can be of use!

Darc19

Flailing wrote: »

I sell online already, the retail outlet would be in addition to that and is something that lots of customers have expressed an interest in.

I agree with jimmii, see where your online customers are from.

Check how many are within 20 minutes of the proposed retail unit. (80% of retail customers come from within 20min)

How much will they buy from the store, deduct that from your online sales. How many new customers will you REALLY get?


Online, do you have a unique selling point. Is your service exceptional, do you actively seek reviews (there's a free Google widget). What rate are you growing (should be 50% this year)

Can you survive on current online business?



And also, would a business park unit with a retail "showroom" be an option?

Flailing

Darc19 wrote: »

I agree with jimmii, see where your online customers are from.

Check how many are within 20 minutes of the proposed retail unit. (80% of retail customers come from within 20min)

How much will they buy from the store, deduct that from your online sales. How many new customers will you REALLY get?


Online, do you have a unique selling point. Is your service exceptional, do you actively seek reviews (there's a free Google widget). What rate are you growing (should be 50% this year)

Can you survive on current online business?



And also, would a business park unit with a retail "showroom" be an option?

The business has grown about 400% this year, lockdown was very kind to us and the new customers that we gained during lockdown have kept coming back. What we sell has been growing massively in popularity in the past few years. There isn't anywhere in Connaught that offers what we plan to(we will expand stock when we get a retail unit). I know personally when I buy what we sell I much prefer the in person buying option. We have a large-ish social media following(over 60,000 across instagram and facebook) and a good reputation. I often hear from customers how they saw us recommended on various facebook groups etc. What we sell is also the type of thing that people buy on a whim and keep coming back for more, it is eye catching , not hugely expensive and we do a range of unique gifts(you can't get anything like this elsewhere in Ireland) which are very popular too.

I have zero retail experience though which isn't ideal but had zero experience in e-commerce and I've figured that out. What we sell also isn't a necessity and I do worry that people will be more careful with their money in the very near future and that may effect us.

jimmii

You definitely have a good base to open up a b&m shop but theres a reason why theres so many that fail it's a lot trickier than it seems. Do you think people are going to be willing to drive to you for this product? Unless it's something specific people will generally get something via the most convenient method for them so typically it's either oinline or on their regular route.

What's the staffing situation? Do you have someone who can run the online side of things top to bottom while you're setting up the shop? Even with your existing customer base I would imagine you're looking at a good 4-6 months before theres any money coming from it unless you have a big marketing push.

Gloomtastic!

Intriguing!

If you do go down the retail route, it will have to be manned at all times - probably by at least two people (damn toilet breaks!). Then you'll have to consider cover for holidays, sick leave etc so let's say 2 full-time and three part-timers. Even if you are one of the full-timers, you're still looking at the guts of €100k pa on salaries/PRSI. Plus rent, rates, utilities and of course you'll now have PL insurance to consider - let's say €50k pa


That's €3k a week extra cost. At a margin of say 20%, that's an extra €15k in sales a week just to meet your costs.

If you're the only one selling in Connaught, then maybe consider becoming a distributor as opposed to retailer. Let someone else carry the costs.

Well done in getting this far but you have to thread very carefully when expanding to achieve/maintain the elusive profit we all so love.

lomb

Sounds like you should be expanding the online rather than going into retail. Online scales if its profitable bricks and mortar doesnt..