Following my involvement with the Productivity Commission Inquiry into retail tenancies last week I have been approached by several people with data across a range of businesses in capital city shopping centres. If the data I have been shown is accurate, small business is treated appallingly. No surprise there I guess – landlords have efficiencies in dealing with a national tenant compared to a small business with one lease in one centre. However, does that justify a rent difference of six and ten times the per square metre rate?
Even comparing like size and location within the centre for like, the difference is more than six times the rent for the independent retailer. Six times! And that is in comparison with a chain with not even 100 stores.
For newsagents, 1,450 of whom are customers of my software company, this rent penalty by shopping centre landlords is debilitating. Newsagents control the price of less than half of what they sell. This denies them the flexibility of other retailers. The margin on their fixed price product is slim, 25% or less. This makes them economically vulnerable to the annual rent rises of 5% and more. So, for newsagents, the Productivity Commission Inquiry is timely and important.
I have encouraged those privately sharing this data with me to make a submission. I hope they do. The more we focus on the disparity in rent and other commercial terms for small businesses compared to national tenants the better.
In our work here we are privileged to have access to a relationship beyond IT. This insight helps us better serve our customers and the community more widely. We are resolutely committed to helping small business retailers be strong.