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Landlords want a piece of digital sales

To offset some of the new risks, landlords are looking at whether they can include a portion of a retailer’s digital sales in the pot of revenue that is used to calculate the rent, according the Wall Street Journal. Retailers, which are already paying rent on e-commerce warehouses and often don’t make strong margins on online sales, will be understandably reluctant to hand over a cut. But there is some evidence that physical stores drive digital purchases. Opening a new shop in an area increases traffic to the retailer’s website by 37%, according to a report from ICSC.

  • Worth Noting: Gap announced plans on Thursday to hire part-time workers ahead of the holiday season to help pick and pack online orders and staff its call centers. Like many other retailers, Gap said it is expecting a surge in its digital business. It is also looking for extra staffing for its contact-free services, like curbside pickup, CNBC noted.
  • Be Smart: However things turn out, new lease arrangements will require retailers to open their books to landlords in a way they aren’t used to, and to explain how the online and store-based sides of their business interact. Rather than passively collecting rent, property owners will more than ever be partners in their tenants’ business. Negotiations between the two sides aren’t going to get easier any time soon. [WSJ+CNBC]

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