Have you ever wondered why you can walk in a regional mall almost anywhere in America and find the same chains, the same stores almost the same mall layout,?
The answer is: because Simon (even if they are small stores) has properties, the owner of most regional malls in America, a recipe for success, who prefer large chains tend to through local dealers. In terms of Simon, the formula brought wealth to its shareholders. Simon has treated its shareholders really well over the years, so that you do not blame them can not find and duplicate a recipe for success.
For convenience I will call the Simon formula of McDonald's formula. They have perfected an experience where buyer find exactly get what kind of knowledge of shopping in a mall, still before them into set foot. Buyer can consciously do not know that Simon has a mall, but if they go to the parking lot, they can unconsciously recognize this fact.
Simon has three or four primary anchor tenants in the Mall, fairly evenly distributed over the outer corners of the building. It is usually a movie theater and food court (many with the same chain). Almost every Simon regional Mall has six to eight jewelry stores in them.
What in the past three years by most Simon properties are slipped that bring local retailers, a kind of uniqueness and local colour to the Mall. How attempted Simon, form, because this is it, in the kiosk-based traders with very small footprints, which were local collegiate, sell regional souvenirs and perhaps even local food.
The main reason that local merchants, the regional shopping centres have left is occupancy costs. Note, I am not using the term "rent." The way Simon and other Mall owns it is a base the rent itself turns out to be as a relatively small part of the total cost of the assignment. On the Mall for rent fees common area maintenance (CAM) fees. Such fees include air conditioning on common areas, security, shopping centre marketing and Concierge. Although each lease is a little different, is it not uncommon, that 10-14 CAM added fees, rent the basis for free find.
Then there is the "sales overdose" fee. If a company passes an agreed sales threshold, it will owe the Mall an additional percentage of their gross profits to be paid at the end of the year.
In a real, a local tenants in a regional mall the tenant occupies space in the Mall from the day it opened up a few months ago. During the company's best sales year in 2006, the total occupancy costs were about 20 percent of the local retailer's gross sales. When the recession started, went reseller sales costs in 2007, but its occupancy costs remained the same. Things got even worse in the next two years. Until end of 2010 was the retailers almost 60 percent of turnover gross to the Mall in occupancy costs pay. Although local mall management was sympathetic, the economic reality was that Office at home, that properties could replace Simon lost local tenants in about 30 days with a major national coffee chain. The difference is because Simon Kontenbeziehung with the major coffee shop chain, costs are likely to allocation as percentage paid by sales well below the local dealer.
In real numbers, the local distributor of 14,000 paid $ per month for approximately 1,500 square metres area. My estimate is that the major coffee shop chain just $8,400 pay per month for the same period.
I can not blame Simon for their strategy, to make a profit for their shareholders. I think it is sad that local retailers believe, should to start them in this regional shopping centres. Simon, has such as smaller, picturesque centres call them "lifestyle" centers, where occupancy costs are much lower. Other retail space owners have smaller properties, which are often easier to get in and out of.
With the Internet and social networking tools, a savvy dealer can create their storage location as a target and not as a boost as they are now in regional shopping malls. If the concept of the suburban regional Mall was designed there was no high speed information superhighway consumers. Consumers are in the driver's seat and they must bring retailers of all sizes and flavors, what they want for a reasonable price, or they will die.
When a retail establishment, the only brick and mortar has sites, you should strongly reconsider your strategy. You must be sure a Web site and even an online store is a good idea. You can also not in brick and mortar location, if you can only move to online sales. The beauty of the online shop is your cost for the assignment is very low and your sales range is as far as the Internet is.
Sam Thacker is a partner in Austin Texas-based business finance solutions
Direct E-Mail: sam@lesliethacker.com
Twitter: @ SMBFinance
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