In the busy world of retail and commercial real estate, negotiating trading hours can be a vital component of your Lease agreement. Whether you’re opening a chic boutique in a shopping centre or a cosy café on a shopping strip, understanding how to negotiate these hours can significantly impact your business success. In this article, we are sharing with you our tips on how to tackle this aspect of your Lease with confidence.
Why do Trading Hours even matter?
Trading hours can dictate the rhythm and flow of your business operations, influencing everything from staffing levels and stock replenishment to customer traffic and sales volume. Flexibility in trading hours can enhance your ability to cater to specific customer needs, maximising potential revenue during peak shopping periods or quieter times.
However, opening outside of your agreed hours may come at a cost, especially if you are in an enclosed shopping centre environment. If you choose to operate your business, when the rest of the shopping centre is closed, you might incur what is called “Extended Trade Charges”. This is because the shopping centre may incur costs for things such as cleaning or security staff, additional power for leaving the lights and air conditioning on etc, while you are open, when no one else is and it is not reasonable for the other Tenants to pay for this, when you are the only one trading. When there is a small group of businesses open, these costs will be shared accordingly. It’s crucial, when you are considering your trading hours, that you factor this into your calculations.
Conversely, in a shopping centre environment, where there are minimum hours, known as “Core Trading Hours” outlined in the Lease, you MUST be open for trade all of these hours, otherwise you will risk being penalised with a fine. When shopping centres market their centre, they are marketing all of the businesses within the centre and customers should then be able to have an expectation that all of those shops are open, all of the hours that the shopping centre is advertised as being open. Consistency is key when it comes to customers knowing how and when they can access your business, which is why these rules are often stringently enforced. There is nothing more frustrating for a customer, than going to the shopping centre at a time, which is advertised as the whole centre being open and finding the business they want closed.
Tips for Negotiating Trading Hours
- Understand Your Market and Customer Base
Before negotiations, clarify your target market. Analyse customer foot traffic data and peak shopping times. Aligning your operating hours with these patterns enhances convenience for customers and will ultimately, optimise sales.
- Review Competitor and Neighbouring Store Hours
Keep an eye on the trading hours of your local competitors. Understanding industry norms provides leverage during negotiations, as aligning with or differentiating from competitors can strengthen your position.
- Evaluate Landlord Requirements and Flexibility
Shopping Centre Landlords often have set trading hour requirements to ensure a consistent shopping experience. However, they are often open to a discussion with businesses, who want to open longer than the Core Trading Hours of the centre. Inquire about this, especially if extended trading hours could benefit your foot traffic and sales.
- Highlight Mutual Benefits
In your negotiations, highlight how your proposed hours could benefit the Landlord and the centre as a whole.
- Consider Peak and Off Peak Variations
Consider whether different trading hours for peak and off peak seasons would work. If you are a food business, do you stay open longer in daylight savings time? This demonstrates responsiveness to shopping patterns and flexibility in meeting the needs of your customers.
- Include Contingency Clauses
Include clauses in your Lease, which allow for periodic review and adjustment of your trading hours. This protects you against unanticipated changes in customer behaviour or economic circumstances, allowing you to adapt to growth or downsizing, as needed.
Why negotiating this upfront leads to success
Effectively negotiating trading hour clauses provides you the flexibility to respond to the market quickly, without having to seek further consent from the Landlord, potentially giving you a competitive advantage over other similar businesses. It will help you to be dynamic, optimise operational efficiencies and most importantly, improve the customer experience.
Being aware of potential extended trading charges or possible fines for not trading when required, ensures that you are making informed decisions, deliberately impacting your business.
It is critical that negotiating trading hours, as part of your Lease, is not an afterthought. They are a powerful tool which can enhance your business flexibility and profitability, while meeting customer expectations. Be proactive, persuasive and perceptive, as you prepare for your next Lease negotiation. Your future success may depend on these essential discussions.