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Another newsagent walks from a shopping centre

This is becoming an almost weekly occurrence:  Another newsagent has decided to walk from their retail business in a relatively major shopping centre rather than pay a 10% increase in rent and fund the landlord required shop fit.

Some landlords are happy to accept this, and see families lose the businesses they have built up, often over many years, because there are those ready to take on a newsagency at the higher rent.  I have heard of cases where leeches are in the ears of landlord representatives long before a lease is up, as if encouraging the landlord to not offer the existing tenant a deal.

Other landlords accept a long term newsagent walking because they are ignorant of the newsagency economic model.

Newsagents in shopping centres owned by major landlords – AMP, Centro, QIC, Colonial First State, Westfield etc – need support from magazine and newspaper publishers, lottery businesses and the like to achieve more equitable rents. Otherwise we will see more shopping centres without newsagency businesses.

We need to stop families feeling so helpless that they walk away from their family business.

It takes a lot of guts to walk away from your business at the end of a lease.  This act alone speaks to the unfairness of lease terms and the competitive forces marshalled against the incumbent newsagent – sometimes including competitive forces of people closely aligned with the newsagency channel.

To read more about the cost of running a newsagency in a shopping centre, read Finding $17,500 extra gross profit this year, my blog post from August 17 about the cost of annual rent increases in shopping centres.

Newsagents facing a tough situation with their rent may have more options than they currently know.  For example, in Victoria there is the office of the Small Business Commissioner and VCAT which can be used to resolve tenancy disputes.  The Small Business Commissioner is specifically charged with helping resolve tenancy issues so that small business owners do not lose their businesses.  I have used this route with success.

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  1. Blake

    It’s not just news agencies, it’s also happening to hundreds of other shops.

    Butchers, hairdressers, fruit&veg shops.

    The key to any business – assume that you will close your doors when either your lease is up or your franchise term runs out. (The sooner of the two if they aren’t aligned)

    As long as you can take a comfortable wage and pay off the purchase price in that term, you will live. If you get lucky and can re-sign a lease & afford a fitout – all the better.

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  2. Derek

    It is sad that this is happening, I am sure this example is simply you cannot get blood out of a stone.

    The ironic thing is as you said another will step into its place.

    Talking about the newsagency economical model, I was told this morning that my friend is using the SMH App to access the paper on his phone for $2.00 a week.

    Mark, was it you who suggested diversiification within each others business’s for a good few years now. This is really serious stuff.

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  3. h

    The ironic thing is as you said another will step into its place.

    The new agent must be being funded by some kind of Bank – HOW ? Or are the newbies all business migrants? Someone is being led to the slaughter here…..

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  4. Y&G

    These are really scary times. And landlords know full well the impacts of their greed.

    Very, very sadly, just yesterday, I was advised of two businesspeople in this region who had taken their own lives in the last fortnight, due in no small part, to rising rents in these tough times. This area is really feeling it. Apparently 10,000 applicants turned up at a sign-up day for mining jobs recently, with another 5,000 signing up in a neighbouring region. That kind of says it all. As it is, that’s where so many of our former customers have gone, over the last three years, just to chase work.

    We’re just grateful that we’re still ticking over.

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  5. hateBullies

    our landlord absolutely refuse to work with us regarding rent. even tho traffic and thus sales is down 20-30% for the whole centre….they insist alot of traffic exists……and refuse to lower our rent which is the highest in the whole centre.

    and it took them 9 months to give offer. with the sales trend going down and the terms that they want a 4% yearly rent increase……the risk is too great for us to continue. we won;t be signing their damn terms. i may lose a shitload of money….but i won’t be a slave giving them rent and not earning anything for myself.

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  6. June

    Our shopping centre has been under renovation (try demolition) for nearly 2 years and is due to open next week.
    This morning Tizi, from IPS came into our
    store to check the opening day so that she
    can arrange some giveaways for us.
    This was totally unheralded by us but I would like to say here that we so appreciate
    both her knowledge of our centre and her
    care and concern about the grand opening
    having some quality giveaways for the customers who come to see the new centre.
    The same lass used to work for NDD here in SA and she did the same for us when we
    opened our new store in the centre 3 years
    ago.
    I know the distributors get plenty of flack from us on this site (and others) but I would like to give credit where it is due and
    Tizi, you are a great representative for your
    company. Thank you and IPS.

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  7. ebo

    Those shopping centres should be named so that we know who they are and be warned.

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  8. hz

    How does it help to know if it’s Westfield or Centro or others ….

    The big shopping centres are also fighting for their lives, I reckon their loan repayments are bigger than mine !!

    Perhaps irrelevant but fascinating to read about Mr Samuels (ex ACCC) and his DFO business in Victoria. I may be naive, but I would have thought he would have had more ability than most to not get caught out so badly in commercial dealings.

    We all have to cut our cloth to suit.

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  9. Mark

    Hate, depending on which state you are in you may have cost effective avenues open to you. I achieved a 30% rent reduction for one of my stores by using one such avenue.

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  10. Brendan

    hz, The large centres paid for the land so long ago it doesn’t matter any more. When they renovate the introduce more shops that should pay for the renovations AND try to increase rent on current tenants claiming higher traffic. The flaw is that the extra shops also increase competition so if 1 business of a type becomes 2 traffic needs to more than double to make up for the extra competition and a probable rent rise. I bet traffic does not increase to anywhere near this proportion.
    The shopping centres lose money when through unrealistic rent they send businesses broke and owing them money. Greedy short sighted actions that work for them in good times but bring them AND the small businesses in their complexes undone in tough times.

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