Pearcedale Hardware is closing today and the ABC has published a deep-dive into why:
For many residents in the quiet township of Pearcedale, the local shops are the heart of the community.
On this weekday, the complex an hour’s drive south-east of Melbourne is beating strong.
Shoppers exchange cheerios across the car park and small talk about the impending rain as they bustle, car keys in hand, between the 13 shops.
The shop was their retirement plan. They hoped to rebrand it and work towards selling it, believing they could get a few hundred thousand dollars.
But they say things began to look shaky when their lease lapsed in 2019, and the owners wouldn’t sign a new agreement with them.
They were on a month-by-month arrangement, when in May this year their property agent emailed them a new leasing agreement.
“[I was in] disbelief. I couldn’t believe what they were asking,” Adrian says.
The landowners were tripling the rent — from $29,687 a year to $88,638 a year.
Be sure to read the whole story.
There are many good landlords out there who go above and beyond for their small business tenants. There are also plenty of landlords who suck.
This story is a reminder that we small business retailers sign our leases, accepting the terms and conditions, accepting the risk.
When a lease goes to month-to-month, that’s what it is. We need to manage our business with that expectation and do our own planning, rather than relying on a decision from the landlord.
I appreciate it can be difficult and challenging. But, it’s best we expect the worst and plan for it, to protect ourselves and our business as much as we can … because, too many landlords do suck.
Retail is fundamentally changing in ways we can see and, more importantly, in ways we cannot see. We have to be as far ahead of that curve of change as we can be. This means disrupting your own businesses. Running a shop with one prime source of income (the shop) is an out of date model. we seen to diversify as to what people buy, how they buy and the locations they buy from in the retail world today. This approach spreads the risk.
Back in the day, opening the front door of your local shop was the key marketing activity. Not now. Not for many years.
I have been in the situation of the folks at Pearcedale Hardware, facing a massive rent hike. I said no thanks. I am lucky to have a diverse business such that closing one shop would not hurt too much. But … I evolved the business to be that, to not rely on one location.
I appreciate many local small business retailers don’t feel they can do that due to capital, local situation or other factors. But, there are ways to insulate your business from the impact of a massive rent hike. The time to seek those ways out is long before you need to … and that is the core point I’d make today.