NEGOTIATING 101

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NEGOTIATING 101

• Negotiating Techniques
• Presented by John Edgar
• 
  President, Calendar Club of
  Canada
• Nancy Ridley
• Regional Manager, Specialty Leasing
• Ivanhoe
  Cambridge

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COMMON GOALSDEVELOPER/RETAILER

• PROFIT
• OBTAIN PROJECTED BUDGET/RENT (DEVELOPER)
• OBTAIN PROJECTED SALES VOLUME (RETAILER)
• STRONG VISIBILITY
• EXCEED CUSTOMER SATISFACTION
• BUILD RELATIONSHIPS
• WIN-WIN NEGOTIATIONS

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DEVELOPER STRATEGY

• DEFINE YOUR PROPERTY
• POSITION IN OVERALL MARKET
• OCCUPANCY OF CENTRE
• DEMOGRAPHICS OF CENTRE
• RETAIL USES IN THE CENTRE
• SALES TRENDS
• TRAFFIC
• COMPETITION
• BUDGET EXPECTATION ON THE SPACE
• TERM OF LICENSE LONG TERM VERSUS SHORT TERM
• ENHANCEMENT OF MERCHANDISE MIX
• EXPERIENCE AND QUALITY OF RETAILER
• ABILITY TO CROSS SELL MULTIPLE CENTRES
• HISTORY OF SALES OF SIMILAR RETAILERS

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DEVELOPER NEGOTIATIONS

• TIME THE NEGOTIATIONS
• PUT A TIME LIMIT ON THE OFFER
• LESS TIME THE MORE OFTEN THE DEAL WILL CLOSE
• DISCUSS THE ENTIRE LEASE
• THERE SHOULD BE NO SURPRISES FOR THE RETAILER
• DISCUSS ALL RELATED CHARGES
• RENT AND PERCENTAGE RENT
• USE CLAUSE
• SETUP, MERCHANDISING SPACE, OPERATING HOURS
• TERMINATION

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DEVELOPER NEGOTIATIONS

• ADDRESS THE NEEDS OF BOTH PARTIES
• TALK THE SAME LANGUAGE
• LISTEN TO THE PROSPECTIVE RETAILER ON WHAT THEIR
  NEEDS ARE
• EDUCATE THE RETAILER ON RENT STRUCTURE HIGH
  TRAFFIC LOCATIONS VS LOW TRAFFIC LOCATIONS
• BE KNOWLEDGEABLE ON LOCATION, WHERE THEY WOULD
  PERFORM
• TRAFFIC FLOW OF CENTRE
• EDUCATE RETAILER ON ACCEPTABLE STANDARDS OF
  CENTRE

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DEVELOPER NEGOTIATIONS

• DETERMINE OPENING DATE
• WHEN IS THE SPACE AVAILABLE
• BE CLEAR AS TO WHEN RETAILER MUST BE OPEN
• KEEP AN OPEN MIND
• NEVER SAY NEVER
• SAYING "NO" WILL NOT HELP CLOSE A DEAL
• BE UNDERSTANDING OF A RETAILER'S POSITION IN
  REGARDS TO A CERTAIN REQUEST SUCH AS RELOCATION,
  TERMINATION, RENT

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DEVELOPER NEGOTIATIONS

• ALLOW FOR CREATIVITY
• RENTS TOO HIGH SELL RETAILER ON LEASING SMALLER
  SPACE
• SPACE IS TOO SMALL FOR RETAILER SUGGEST STORAGE
  UNIT
• NO PERCENTAGE RENT THEN INCREASE BASE RENT SEMI
  ANNUALLY
• RETAILER WON'T PAY MARKETING FEES SUGGEST
  INCLUDING IT IN BASE RENT
• RETAILER WANTS EARLY TERMINATION SUGGEST
  TERMINATION BE TIED TO SALES PERFORMANCE AND MAKE
  IT A MUTUAL RIGHT

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RETAILER STRATEGY

• KNOWLEDGE OF CENTRE
• SALES PER SQUARE FOOT
• DEMOGRAPHICS
• QUALITY RATING (A, B, C, D)
• OCCUPANCY LEVEL
• COMPETITION
• LOCATION
• VISIBILITY

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RETAILER STRATEGY

• KNOWLEDGE OF CENTRE
• CO-TENANCY (SIMILAR PRODUCTS)
• TRAFFIC FLOW PATTERN (BEST ENTRANCE)
• IN-LINE VERSUS KIOSK, CART
• LENGTH OF TERM
• PROJECTED SALES VOLUME
• COMPARATIVE COSTS TO OTHER CENTRES
• SALES OF SIMILAR RETAILERS
• GUIDELINES AND STANDARD FOR PRESENTATION
• ANCHORS WHO DRAWS THE BEST TRAFFIC

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RETAILER NEGOTIATIONS

• BUILD A RELATIONSHIP
• GET TO KNOW LEASING REPRESENTATIVE
• WIN TRUST BY ESTABLISHING RELIABILITY
• UNDERSTAND YOUR LEASING REPRESENTATIVE BUSINESS
  STYLE
• PREPARATION
• UNDERSTAND RETAIL CONCEPT
• KNOWLEDGE OF PROPERTY
• KIOSK/IN-LINE OR CART (NEEDS)

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RETAILER NEGOTIATIONS

• 3. GOALS AND OBJECTIVES
• DEFINE USE CLAUSE, LOCATION, REQUIREMENTS
• SET LIMITS (WHAT WILL BE ACCEPTABLE)
• PROVIDE AS MUCH INFORMATION ON RETAIL CONCEPT
• DETERMINE LOCATION
• DISCUSS TERMS AND CONDITIONS OF THE DEAL
• RENT, BREAKPOINT, PERCENTAGE RENT, USE CLAUSE,
  TIMING, IMPROVEMENTS TO LOCATION, TERMINATION,
  RELOCATION

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RETAILER NEGOTIATIONS

• 5. CLOSING THE DEAL
• BE ABLE TO COMPROMISE
• RECOGNIZE WHEN TO CLOSE
• RECOGNIZE WHEN BEST DEAL MAY BE NO DEAL
• FOLLOW UP
• CONTINUE TO COMMUNICATE
• DELIVER WHAT YOU HAVE PROMISED