Retail TNT

In Event of Foreclosure

Foreclosure of a mortgage typically extinguishes all claims to the property. In other words, if you’ve negotiated a lease and started a business, your right to use the retail space is terminated by foreclosure unless there is a separate agreement.
Will Lender Cancel?

In many cases, the lender has a defined period of time to reject leases or they are assumed to remain intact. Further, lenders often want to retain the leases and tenants to make the property more salable. However, if the rental rate for a lease is well below market rent, and the tenant is clearly successful, the lender would likely terminate the lease and require the tenant to negotiate a new lease at market rent.
Negotiating From a Position of Weakness

The tenants negotiating position is much weaker than it was when he first negotiated the lease. The tenant has a successful business at this location. Changing the location of the business may damage or destroy the business. The tenant’s ability to bargain and negotiate lease terms is a weak.
Nondisturbance Clause

Tenants can avoid this dilemma by obtaining an agreement that the lease will not be terminated by foreclosure. This is termed a nondisturbance clause. Landlords are reluctant to grant this concession due to the limitation it imposes on the landlord when obtaining financing.
Maintenance Standards

The definition of maintenance standards is often vague. A typical clause may read that “the landlord will maintain the property in a manner consistent with local practice and a prudent owner”.
Personal Guarantees

Landlords love personal guarantees since they substantially limit the tenant’s ability to abandon operations at the retail space. Personal guarantees should be avoided by tenants whenever possible. It is reasonable that the tenant repay the unamortized portion of any tenant improvements and leasing commissions if the lease is terminated early. Further, it is reasonable for a tenant to guarantee a minimal level of performance on a building built to its specifications.
Different Rules for Second Generation Space?

However, for second-generation lease space, it is reasonable to request that the tenant not be personally or corporately responsible beyond paying the unamortized portion of tenant improvements and leasing commissions. Although this is reasonable, it may not be possible. The strength of the local rental market and local practice will dictate whether landlords can extract personal guarantees from tenants.
Purchase Option

For single tenant retail buildings, tenants often want a right to purchase the building at a predetermined price. Landlords prefer to avoid this. A compromise is providing the tenant a first right of refusal.
Sublease Issues

Landlords want the tenant to make rental payments throughout the lease term, but don’t want the tenant to profit from subleasing the retail space. In some cases, the tenant has the right to sublease the space subject to the landlord’s approval. There’s often a clause that the landlord’s approval shall not be withheld unreasonably. There’s also often a clause limiting the types of businesses which can sublease from the tenant. Sublease payments in excess of payments on the primary lease can be an intensely negotiated item.
Minimum Hours of Operation

Some retail centers require fixed hours of operations for each tenant. The concept is great. If a shopper visits the mall, they know each store will be open from 9 a.m. until 9 p.m. (or whatever the hours of operation). However, assume you expect to get 90% of your business between 12 p.m. and 5 p.m. In some cases, the minimal hours of operations are nonnegotiable. You may need to consider the excess hours of operations part of your occupancy cost.
Dedicated Parking

Dedicated parking is another issue where interests almost always diverge. Tenants love to have parking dedicated to their customers and landlords hate having parking dedicated to any one store. Peak traffic for a store may occur in a short period of time. However, the parking spaces are typically dedicated 24 hours per day. A compromise is the right to put portable signs in front of parking spaces several hours per day consistent with the tenant’s peak hours of business.
Expansion Options and First Right of Refusal

Expansion rights and first rights of refusal are less typical for retail than for office. However, assume you are opening a small restaurant in a highly vacant shopping center. You’re initially taking 1000 square feet of space but hope to expand the restaurant to five or 10,000 square feet of space. Having the right to take additional space at a previously agreed-upon rental rate and to claim additional space through a first right of refusal can be invaluable. Once the restaurant is successful, negotiating rental rates at a favorable level will be difficult.
Example

For example, assume your restaurant has been operating successfully for two years and you expect to expand the restaurant during the next 12 months. Unfortunately, your landlord tells you he just leased the spaces on either side of you. A first right of refusal for additional space can allow you to avoid this problem. Consider whether the rental rate for the first right of refusal is the rate agreed upon by the landlord and the new tenant or a predetermined rate.

The Market Research and Consulting division of OConnor & Associates provides information necessary to make decision to commercial real estate professionals. Occupancy and Rental Data, ownership and management information are routinely gathered for four major land uses multifamily, office, retail and industrial. This information allows investors to compare competitive properties, facilitate business decisions and track market and submarket performance.

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Online retailers are facing dramatic changes and they need to respond quickly if they are to survive. That’s the conclusion you can draw from research showing just how much shoppers are in control. The study from the consultancy firm PwC should be a wake-up call to online retailers as it reveals some stark messages.

For one thing, the study has found that the majority of online shoppers only buy from fewer than five websites. Indeed, 46% of the 15,000 people in the study only shop at one online retailer. In other words, the vast amount of online purchases are being concentrated into a handful of leading stores. That should come as no surprise. With Amazon, for instance, raking in around $1bn ever four to five days it dwarfs retailers like the world’s biggest online fashion store, Asos, which managed to produce an income of around $1bn but only in 12 months. Even so, Asos itself then dwarfs other fashion retailers online. However you dice and slice the data, most online retailers are not doing well; they are only producing tiny amounts of trade compared with the giants of online shopping.

We need to ask ourselves why this situation exists. After all, the standard mantra of “online success” is that if you create a niche, a tiny niche at that, people will flock to you. The data suggest the opposite – that people are flocking to the generalists, like Amazon.

The reason is revealed in the PwC study. It’s mostly about trust. Some 86% of people in the study cited trust as the most important factor in a retailer. With the majority of people shopping at a few online retailers it is clear that these are highly trusted companies. One reason other online retailers may not be doing so well is because they have not demonstrated enough trust.

Trust is established when a company delivers the right product at the right price to the right person in the right way. Good old-fashioned marketing. Many online stores fail at several of these hurdles. They do not deliver the right product. They push products inappropriately. They have poor logistics systems in place. In other words, trust begins with having a solid business in place. Far too many online retailers are simply trying to “cash in” on the web wave without actually putting proper business systems in place – leading to lowered levels of trust.

However, trust is also established in another way – by demonstrating expertise. Amazon, for instance, is an acknowledged expert in online retail. Their shopping experience has inspired many other online retailers to offer something similar. You cannot move on the web for articles about creating a store like Amazon and the company even produces systems, like Amazon Web Services, which other retailers rely on. Throughout the web, Amazon has shown it has extensive knowledge about its “world”. Shoppers – even subconsciously – see this extensive knowledge and influence and this increases their trust. We trust people more when we believe they know a lot about something.

The PwC study also demonstrates how important knowledge and influence is. Shoppers said that they expected retailers to have a compelling story to tell. In other words, they don’t just want an online store – they want to shop from retailers who know lots and spread their knowledge widely. Asos was one company that discovered when it launched a magazine and blogs that sales went up. People start to trust you more when you don’t focus on selling but instead offer compelling content.

It all suggests that shoppers are driving change. If retailers do not respond by increasing trust and by demonstrating great knowledge the stranglehold of the main online retailers will merely strengthen. The PwC study should be a warning shot to online retailers – improve your business, gain more trust and fill the web with your stories and you will do well. Simply run a shop and you will be out of business before long.

The retail industry exemplifies the maxim, change is constant. Still, the approach of the industry towards emerging technology of cloud computing is somewhat baffling. Cloud computing, a paradigm shift after the client-server model break-through of the eighties, is starting to show up in every other business. Curious, retailing industry is clearly lagging behind. It happens when the practical applications of the technology can do wonders to the industry. The word ‘cloud’ in cloud computing is actually a metaphor used for internet. Using internet would have robbed the concept of its novelty.

Although everyone is familiar with information sharing through internet and worldwide web, performing all the operations of computing through the internet is not so familiar. Cloud computing exactly does the same. It shares information, software-applications and operating system-and infrastructure-hardware like servers and storage units – using internet. A revolutionary cloud computing model can avail high power computing to the customers who need to have only typical input/output infrastructure.

Software industry giants have already started providing their services on cloud. CRM of salesforce.com, office applications from Microsoft and Google and IBM enterprise solutions have already become popular. Sadly, retailing – one of the largest sectors of the economy – has not yet begun its experiences with cloud computing.

In the context of retail industry, cloud computing is particularly efficient in collection and analyses of huge volumes of sales data and in real time inventory management.

In retailing, points of sales generate large amounts of data each day. The sales data can be obtained through loyalty cards and discount coupons also. Most low and medium level retailers do not have the necessary resources to capture or utilize such enormous amounts of data. Cloud provider in retail can collect such data from sophisticated server networks connected to the supply chain to independent cash registers at family owned small stores and store it for the retailer. Such stored data may be accessed from anywhere, provided internet is accessible. A cloud computing provider can track performance of products in comparison to previous time periods. The cloud provider can identify the trend and seasonality component of each product, brand or category and identify and monitor the performance. Then it can provide analytical results to the retailers. The provider of the service can serve many retailers at the same time, without making each retailer do it individually for themselves.

The sales data collected from the point of sales is currently under-utilized. It is more due the incompatibility between volume of data and the processing power of the system. Such time consuming analyses fail to provide any useful insight in to customer behavior or trends in sales. The cloud provider can utilize high power computing resources and statistical models to analyse data in much shorter time. This is more so with to real-time analysis. Real-time analyses require huge capital expenditure and it incurs significant operating cost, often unaffordable to retailers.

A good cloud provider can easily help the retailer in understanding patterns and trends within large databases. It can be further utilized for creating analytical models, and to provide an edge to decision making. Thus retailers can increase their ability to forecast their customer’s behavior and plan accordingly. Retailers can then develop customer programs, marketing, merchandising and pricing strategies to attract more business. The cloud provider themselves design and provide such retailer specific plans.

Another important area of cloud application will be inventory management. Real time data and cloud architecture will largely reduce the problems like stock outs and overages. As well known, online retailers do not have inventory managed by themselves. Instead, it is done by the manufactures. Cloud computing can provide an efficient utilization of logistics, which will keep losses to the minimum in inventory management. What the online commerce does can be extended to whole of retail sector. Besides, as the cloud provider will be serving numerous retailers, they can very well manage difficult situations like stock unavailability. Cloud providers can provide valuable advises to retailers regarding product availability and back-up stock from forecasts. They can get realistic forecasts by analyzing huge amounts of data from numerous retailers. Thus retailers can develop a supply chain where the right product arrives at the right time.

Tier one retailers can save lot of expenditure in IT management, if they switch to cloud computing solutions. The complexity of keeping and managing individual systems can be avoided. Today large retailers struggle to keep tens of thousands of computers across hundreds of locations. The management of such a complex system causes enormous expenses for them. Such operations often cause poor decision making in their field of competency – retailing. Large expenses of management and administration of IT and networks can be reduced by simply switching over to a trusted cloud provider.

What is the difference between cloud computing and traditional model? Cloud computing has a number of advantages over the traditional software business in which retailers get licensed software installed in their systems. Here the retailers need not spend huge money on software licensing. They need not buy high end servers with high computing powers. There is no requirement of sophisticated storage units. The administration and networking of computers can be avoided. The pain of providing fire-wall and antivirus protection is avoided. Thus a there can be a significant reduction in investment as well as in operating costs.

One significant benefit for the cloud provider will be that of scale. Affordable solutions can be provided, considering the huge number of retailers in the industry. Most of the tasks to be performed by the provider will be of repetitive nature. Administration and management of databases can be easy due to centralization. The robustness of the whole system can also be ensured. Security and other reliability threats can be minimized due to the salient features of cloud architecture

The future of the cloud in retail starts with small retailers. Small retailers can effectively implement cloud solutions faster. Such solutions offer them significant cost reductions also. Any new venture in retail will also look for quick and easy implementation. An established cloud provider with a successful cloud model can provide quick and cheap solutions. The giants in retail industry may hesitate to adopt the cloud solution, considering the current maturity of the technology. With improvements in cloud applications as well as in internet technology, they will find it cost-effective to switch over. It is significant to note that innovations in most of the fields are taking place in the cloud computing model, not on traditional software business.

Retail cannot shy away from the emerging and powerful trend in the world of computing. With lots of cost-saving and time-saving measures, it will be inevitable that retail will adopt cloud computing once there evolve competent solutions.

Many retailers, such as clothing or apparel, footwear, and sporting goods companies that have multiple locations require retail point of sale software systems. The type of system required in today’s up-to-the minute world is immediate. Real-time information can make the difference between a sale and a loss. Being able to get the right items at the right time and place are invaluable to such companies. However, especially in the current economic climate, one doesn’t want to have to pay through the nose for such services.

Finding a company that offers software as a service is the ultimate for retail point of sale system software. Affordable service with highly trained technical support is essential. A business needs to have all of its locations linked together with the ability to easily manage the operations of each store without wasting time. Being able to immediately know what is on hand, in transfer or on order is essential to such system software. The benefits of this instant information include increased sales. One can see that if a customer is interested in a particular item in a particular size he wants it now. If it is not in the current location but you can immediately know where it is and how long it will take to get it in, you are more likely to retain that customer at that retail point of sale.

Another benefit of retail point of sale software is reduced costs. If double ordering can be eliminated through instant knowledge of real-time inventory, this is an immediate cost reduction. Knowing what is selling and what is not selling on a day-to-day basis throughout all locations is invaluable. Being able to order ?on-the-fly’ items that are hot sellers will reduce costs and increase profits. Lack of information is often costly, so having everything you need and want to know at your fingertips can also greatly reduce costs. As sales are increased and costs are reduced, then profitability goes up.

Rather than paying through the nose for a high priced company with expensive hardware and long-term contracts, one can hire a reasonably priced company that has short-term contracts and a minimum of hardware required. Such a retail point of sale system software company can offer easy support as they manage your system and allow you to manage your business. Short-term contracts allow you to better manage your money without being tied into a system that you have never tried before. As you research the retail point of sale system service companies, you will also want to use companies that have an excellent track record with thousands of worldwide installations.

Making certain that your current system is compatible with the retail point of sale system that is available is extremely important to you. Whether you use Windows, Java or UNIX applications, you want to be able to interface with them. If you use a PC or a Mac, you will want your new real-time inventory system to work with the computer operating system that you know and understand. This is all possible, and once you have begun using your newly integrated retail point of sale system software, you will wonder how you ever got along without it.

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