The World's Largest Resource for the Cart, Kiosk, and Temporary Retail Industry

Winter 2001 Taking the Next Step

You’re ready to expand your concept. Or perhaps you’re simply looking ahead to future growth and want to lay the groundwork now. So what’s the next step a short-term specialty retailer should take? If you’re a seasonal cart, the next step might be to develop your concept into a year-round business. Or if you’re a cart or RMU, the next step may be to expand to a kiosk or even a temporary in-line store. But for many temporary merchants, the ultimate goal is to become a permanent retailer.

Actually, there isn’t one single step from here to there—you’ll take many steps along the way to achieve your objective. Many stores that began as carts or RMUs are now successful permanent retailers. Almost all of these transitions required patience, professionalism and opportunity. If you know the destination from the start, you’ll find that while you’ll face many obstacles and challenges, you’re moving toward a rewarding future as a permanent addition to a shopping center.

Being professional

The most important component is professionalism: it covers every aspect of your business, and can make the difference between a successful future and a stagnant status quo. And you must be a professional retailer right from the start, no matter how small or temporary you are. Here’s why: Temporary tenants who want permanent space must realize that the shopping-center staff’s perception of them will have an impact on their future. The leasing staff will ask the mall manager, the specialty retail manager and even the marketing manager whether you’re a tenant who deserves a permanent location. And their answers will depend on how you conduct your business as a retailer, as a tenant, and as a person.

You get only one chance to make a strong first impression in your mall. If you know from the beginning that your goal is to become a permanent store, even your application submission should reflect this.

Model tenant

Once you’re a temporary tenant, be a model tenant. Mall managers with common-area programs are usually both skeptical and hopeful when a temporary wants to become permanent.

How do you become a model tenant? Make sure you adhere to all of the mall’s rules. Pay the rent on time. Don’t bounce even a single check. Report your sales on time. Pay overage rent when it’s due. Make sure your unit is well staffed, well merchandised (it’s smart to invest in a professional visual display), well maintained, and always open on time. And participate in all mall meetings, marketing events and promotions.

In all of your interactions with customers, other tenants, and mall staff, be positive. And be courteous to the mall’s operations, maintenance, housekeeping and security staff. Develop a relationship with your specialty leasing representative and mall manager and let them know your objective.

In short, being a model specialty-retail tenant makes the mall comfortable with the idea that you’re there to stay. An upbeat, model tenant will find that a mall developer is often flexible and willing to create opportunities.

Concept

To pass muster, your concept must meet certain criteria. It must be year-round. It must be deep enough in variety and price points to support a store. And there must be growth in the product lines. In addition, you should have a clear idea of the mall’s demographics and know that your product will fill a need. Your business should be professional in appearance, but it should also be unique enough to attract customers who shop the national and regional chains but want something special.

Remember, too, that a permanent lease can be for as long as 10 years, so your concept must have “legs” and be able to develop over time. Don’t rely on one vendor (unless you are the manufacturer); you should have many sources for your product lines. Become aware of the competition, and visit similar concept stores in other malls. And if you’re going to expand or deepen your product line, get mall approval before you buy additional product.

Marketing

While you’re still on a cart or RMU, create a logo and color scheme that identifies your business and makes it unique. Use the logo and colors on everything. For example, buy professional bags and boxes, but if you can’t afford to have them imprinted, it may be less costly to order stickers with your logo and stick them on. Put your logo on your ads, your business cards, even your Web site if your have one. Using a logo this way makes your business look stable and permanent.

Develop a customer list of names and addresses from your first day in business and keep it going. (If you haven’t done that yet, start now!) Use the list to send fliers, acknowledge special holidays, and announce private sales. Customer loyalty and repeat customers will give your business a sense of permanence even while you’re still temporary.

Operations

Prepare your business for the long term as early as possible. If you’re currently using a cash register, switch to a computer system so you can computerize your business for inventory control. Small, relatively inexpensive POS (point-of-sale) systems now on the market allow you to receive product, produce reports and track sales. Do this as soon as possible, so that you’re comfortable and can use the system before your business gets bigger. Start by researching the best system for your concept: some are better for soft goods (apparel), while some are better for hard goods such as gifts.

Also consider using a barcode and scanner system for pricing and product information. Remember that when you fill a store with product, it’s more difficult to track inventory. With a computerized system you’ll be able to move merchandise at a more productive pace and track the sales patterns of your customers more efficiently. You can lease a system and the equipment you need, and make payments through the business account.

Staffing and customer service go hand in hand. To expand, be prepared to hire and train employees who are interested and able to make a long-term commitment to your business. These employees will be an integral and critical factor in your future success. Help them meet high customer-service standards by creating financial incentives, holding regular meetings, and giving positive reinforcement. Monitor customer interaction by spending scheduled and unscheduled time at your location.

Business history

Plan as if you will be a permanent business, and establish business history and credit. Develop relationships with your vendors by paying promptly, and start to create credit. If you currently receive goods COD or charge them to a credit card, try to negotiate 30-day terms to establish business credit, at least for some product. Apply for credit cards at supply stores such as Home Depot. Find a merchant-friendly bank, meet the manager, open and maintain your accounts, and establish a small-business line of credit. Then pay off accounts using your business checks, and keep records of all your business expenses.

You will need an accountant who understands retail-store language and financing. You want someone who shows an interest in your business even though it’s still small. Work with your accountant to develop a strategic business plan for the future. When you’re finally ready to meet with mall management and/or leasing to discuss the possibilities for your growth, you will need a professional financial statement and a P&L (profit-and-loss) statement, along with your sales history and future projections. Hire a payroll service if your accountant does not have this service.

When it’s time to review the lease, hire an attorney who is familiar with retail real-estate law. He or she will review a proposed lease with you step by step, make revisions and suggestions, and negotiate with the mall’s representative. Before you sign, make sure you understand what every word and sentence in the lease document means. In fact, it’s a good idea to become familiar with lease documents even before you begin the process with your mall.

Very often, the next step to becoming a permanent retailer is to open a temporary in-line store. This is a great interim opportunity—”training wheels”—before the real thing. It gives you a chance to test your concept, your systems and your staff before taking the big step—making the financial investment to be a permanent retailer.

Becoming a permanent retailer is not every temporary merchant’s objective. But short-term retailers who do make that transition successfully are often the most interesting retailers in the mall.


Deborah Kravitz

Deborah S. Kravitz is a partner in Provenzano Resources, Inc, (PRI) a retail real estate consulting firm providing specialty leasing programs, management, leasing, training seminars, and retail development for shopping centers, lifestyle and entertainment venues, airports and retailers. PRI owns and manages the high profile Third Street Promenade Specialty Retail Program, redeveloped in winter of 2005.

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