“Retail Franchisors have long complained of ongoing real increases in shopping centre rents. I am personally aware of several franchisors who have seen average real shopping centre rents nearly double as a percentage of sales over the last 10 years. This requires economies in other areas or it comes straight out of the franchise owners profits. ” said Mr. Grant Garraway, senior consultant of
The Franchise Shop.
“We are seeing the emergence of what have been until now secondary strip shopping precincts as franchisors in particular and retailers generally seek profitable low rent sites as alternatives to regional shopping centres.” Mr. Garraway said. “The Melbourne Age recently reported strong demand in around ten suburban shopping strips which have previously been marginal or underutilised. When you include Melbourne ten or so traditionally strong retail strips this brings to twenty the number of strips franchisors could contemplate.”
“This is in our view as much about retailers looking for alternatives to the massive rents in the major Regional centres, as it is to consumers looking for locations to shop which are closer to home due to the high and growing cost of fuel. These strips can work for retail franchises where your fellow tenants are well known brand stores and chain stores including other franchise owners, which is increasingly the case.”
“The long term future of several well known franchise chains in shopping centres has to be in some doubt, unless they can find ways in increase gross margins or lower other costs.”
17-Sep-2007