Article | The merits of Making Concessions

Here are tips from commercial property partner Michael Higgin on the things to think about when showcasing and selling goods within another retailer’s store space.

Contact

Address
1 London Street,
Reading,
RG1 4PN

Telephone
+44 (0)118 951 6200

Email
enquiry@fsp-law.com

Michael Higgin

Michael Higgin

These are the key points to be aware of when granting or taking retail in-store concessions:

  • Space is ‘licensed’ not leased – the existing shop’s staff will move freely all around the concession area, and the shop will usually provide lighting, ventilation, cleaning etc as if it was an integrated part of the store;
  • Separate staff and separate tills help: using shared tills is tricky and needs careful book-keeping by the shop staff; 
  • For the existing shop control over quality of presentation, security etc is important as the concession will operate without physical boundaries within the store area and interact with their customers almost as if the concessionaire’s staff were the store’s staff;
  • Landlords tend not to be keen on these arrangements, as sharing with anyone apart from ‘group companies’ is generally prohibited, but it can be raised when taking on new leases;
  • A set licence fee is simplest. Turnover rent type license fee can be difficult to monitor, especially if tills are shared, or if orders can be derived on-site and fulfilled on-line. 
  • Prominence, siting (and re-siting powers) and promotion signage for the concession need some thought, as does the issue of compatibility and non-competition with existing brand lines.

On the positive side, for the party granting the concessions, concessions can earn revenue from shop space that might not otherwise be fully used, and attract in new clientele by showcasing goods that are not in their own brand lines with a minimum of stock-holding or product-development risk. For the concessionaire it allows expansion without the same level of overheads that are involved in setting up their own store, and piggy-backing on a store which already has an established foot-fall.