A shopping mall typically represents a good concentration of shoppers within a productive environment. As such the thought of buying a store in a mall can be very enticing. By the law of averages, a certain number of all those shoppers are bound to come into your store, right?
Before you move forward and consider your options, it’s prudent to explore a few crucial considerations.
To begin with, you should start by examining the demographics. Your ideal customers should already be actively shopping in the mall where you’re thinking of buying a store. Look carefully at the other tenants inside the mall – are they directed toward the same kind of consumer, and if so, are these stores turning a good profit? It’s unlikely that you’ll be very successful if you’re the only store in a mall catering to a specific demographic, for instance upscale suburban women.
In most cases, a mall is only as good as its main anchor stores. While there may be some big box retailers in the mall, stop and think for a second what would happen if one of them went out of business. A locked, boarded up store is a terrible sign, and it usually doesn’t bode well for the ongoing success of the other tenants either. If possible, only consider malls that have several anchor stores. In a recession, these stores can make all the difference in your long terms success.
You must ensure that your potential landlord understands the meaning of the word “flexible”. Mall landlords are notorious for including inflexible clauses within their contracts.
You may come up against many problems including crazy requirements that may force you to move the location of your store at a moments notice. Question some of their dictatorial restrictions, including the need to use only their nominated construction companies and electricians. Don’t forget to ensure that you’re allowed to display “for sale” signs in your windows, and also check to see if you can place “special offer” items outside your main doors. Go through every detail of the lease agreement very carefully and ensure that you’re accepting to the fine print within its clauses.
Get your attorney or advisor to check up on the financial health of the mall itself. Find out about tenancy rates, gross revenues and projections. Almost certainly, the information will be available in annual reports and filing statements or you could get this information from the company’s website.
The best research you can do is to go in and speak to the other shop owners. You can state you are looking to buy a store in the mall (NEVER tell them which one) and ask about the landlord, retail business activity, and any other concerns you have.
Before you go too far conduct a complete physical inspection of the mall. This is a good way to assess its financial health, as when things are not going too well you could find that external maintenance is not being kept up. Sidewalks, masonry, landscaping, doors and roofing services should be clean and well-maintained. Parking lots should be functional and well kept and while you are at it, take a visit to the bathroom and food court. Poor restroom maintenance is one of the first signs of a mall in decline. Food court activity is an indication of mall activity.
Your visual tour may not be definitive when it comes to assessing the mall’s overall financial health, but it can be a quick way to eliminate some locations from your consideration.
Richard Parker is the President and founder of the prestigious Diomo Corporation – The Business Buyer Resource Center. His celebrated materials, seminars and consulting have encouraged thousands of aspiring business buyers from around the World to pursue their dream of buying a business.
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