Dear retail landlord,
I am writing to ask for your support with the retail premises that I rent from you: Number 1, High Street, Everysuburb, Australia. Just to remind you, I have been paying the lease for my clothing store/giftware shop/homewares retailer/newsagency since January 2016. During that time, the rent I pay to you has increased with CPI by 2.5% per year. My full-time and part-time staff salaries have also increased by 2.5% each year in line with the Fair Work Commission mandated minimum award rate increase.
Here’s the issue.
In the last three years, the footfall (that’s retail-speak for the number of people walking into my store) has dropped by about 15%. Last year it dropped by 7.5% in just 12 months. That means when I signed my lease with you in 2016, on any given Saturday, 100 shoppers walked into my store (your property).
On a Saturday during my busiest pre-Christmas period in 2018, however, only 85 shoppers got into their car, drove to a shopping strip or mall, and walked into my store. My sales reflect this drop, and I pay my rent from the sales through my till.
Now, I know you’re not to blame for this drop in Australians visiting shops, but the rent I pay to you accounts for a third of my total costs, and I signed a five-year lease. Under law, I can’t pay my staff any less, and I haven’t taken a pay increase in three years. And I won’t talk about my energy cost increases to keep my shop lit and at 21 degrees all year round, because that’ll do my head in.
So, can we talk about how you can help me?
I’ve spoken with a few other retailers, and we think the following things may help.
Can you lower my rent by 10% from next week until the end of the lease? The space that you own just isn’t worth that much anymore. Sadly, it will be worth even less in five years’ time, when 30% of all sales in most retail categories will be made online.
Can you, along with the other landlords in the area, work with the tenants and the local council to build and market weekend events that will attract shoppers? Making our shopping strip as attractive as a farmers market might be a great way to increase footfall into all of our shops.
Can you see if you can develop shop-top living above my store to allow you to earn a rental income from residential renters and thus lower the rent that I pay? You own the land so the only cost is development.
If you could do just any two of these things it would make a huge difference to me, and the whole of Australian retail. If not, then our shopping strip will have gaps in tenancies and only nail parlours, charity shops and massage parlours as tenants.
Plus, you’ll need to try to sell your property in a fast-falling market, and maybe invest in some new out-of-town warehousing, which I may rent from you as I will be a pure online retailer by then.
Jenny and Billy Retailer