Outdoor Retail Tenants: 10 Things To Know About Your Lease
I spoke at the Outdoor Retailer Summer and Winter Markets in Salt Lake City in 2010 and 2013 and know about the unique store concerns that outdoor retailers have. With the 2014 Outdoor Retailer Summer Market going on now in Salt Lake, this is a great time to briefly mention how your retail lease can handle some of these concerns:
Retail vs. Storeroom Rent: Outdoor retailers may need significant storage for inventory. While some retailers can place virtually all of their product on the showroom floor, outdoor retailers may need basements or other storage areas to house bikes, kayaks, and other large items. If the storage area is large, consider negotiating a reduced rent in your lease for these areas. Retail rents typically are priced on the assumption that almost the entire space will be used as sales area.
Store Hours: Outdoor customers may have unique shopping hours. Fly fisherman and cyclists may want early morning hours. Running groups and weekend warriors may want evening hours. Consider negotiating customer-friendly store hours into your lease.
Window Displays: Showing your product in store windows may be a critical component to driving customer traffic. Make sure your lease permits maximum flexibility for window displays.
Workshops and In-Store Events: Many retailers are using in-store workshops and events to avoid losing market share to the internet. A tenant needs to confirm that their lease and applicable zoning laws permit these types of events. In addition, the retailer should check with the local municipality to learn about any necessary licenses for workshops and similar in-store events.
Parking Lot Product Demonstrations: Having the right to use the adjacent parking area for product demonstrations can be a critical sales strategy for outdoor retailers. Customers are much more likely to become interested in the bikes, tents, boats, and other outdoor products when they are easy to see, touch, and test. Securing the right in the lease to use the parking lot for sales, demonstrations, or seasonal exhibits can be a great sales approach.
Unique Environmental Concerns: Outdoor retailers often sell products that have unique environmental issues. Camping fuel, bike lubricant and cleaners, and waterproof patch kits are three such products that may be restricted as hazardous materials in a lease. It is important to consider the types of products being sold in the store. Any environmental issues then can be addressed specifically in the lease.
Liability Insurance: As with all leases, the insurance provision should be checked to make sure it is appropriate for the specific business. Product liability, in-store workshops, outdoor demonstrations, and customer product testing are just some of the items relevant to outdoor retailers and their insurance.
Floor Load and Product Weight: Some outdoor products may be unusually heavy. If weight is an issue, the outdoor retailer should make sure that the heavy products will not violate the floor load limits in both the lease and the actual store design.
Co-Tenancy: If your outdoor store is dependent on customers from adjacent stores (e.g. your store is in the same center as a Whole Foods, and you want the benefit of the Whole Foods customer traffic) consider negotiating a co-tenancy provision, which allows a tenant to pay reduced rent if certain other stores in the same center are not open for business. This is a technical lease term, but one to consider.
Exclusive Use: If having a competitor in the same center would be detrimental to your business, consider negotiating an exclusive use provision in your lease for either the type of store or particular products. An exclusive use right would prevent losing business to a nearby competitor.
This is just a short review of very important lease terms outdoor retailers should consider in their leases. Provisions like these can be technical, and the Moorhead Law Group, LLC would be happy to discuss them in more detail.
Have fun in Salt Lake City!
