New store location, worth or not?

[890890]

Because it's my first start and
Here's the basic info in a local shopping mall:


Rent - $50K/year, 4.2K/month
Size - 820 SF
Retail stores: 70
Average Income - Low-Mid
Floor traffic - 200 to 500 person / hour, 65% over 40 years old
Exisiting optical store: 1
Existing optometry Office(no dispensing): 1

The mall manager would like to add one more optometry store that also sell glasses.

I want to get in. How do you think?

[Jacqui]

The fist thing I would do is to see how the othes are doing. Then start doing numbers (lotsa numbers). Many mall managers don't consider the effect of adding a store that directly competes with others in the same mall.

[MarcE]

I don't really understand the question. But I had to comment.

THE MALL MANAGER?? wants to add an optical store?!! No. The mall manager wants to rent space for $50K. If the mall already has an optical tenant, why would they want to devalue the existing optical by bringing in competition?

[obxeyeguy]

simple math, projected, er actual sales minus cost, minus basic expenses,(phone,electric,advertising,insurance,cleaning,acco unting fees,taxes,ect, minus salary, and the 50 grand rent should not be more than 10-15% of your gross. Better do $500,000.00 the first year or be prepared to pay.

[Johns]

Because it's my first start and
Here's the basic info in a local shopping mall:

The mall manager would like to add one more optometry store that also sell glasses.

I want to get in. How do you think?

I'd find out how badly the mgr "would like" to add one more OD store. (and why) Let his pencil do the talking with adjusting the bottom line.

Why do you want to get in? What kind of numbers are the other guys doing.

The number one thing that hit me between the eyes was the "low to mid income" on the demographics. With that demo, you won't be selling a lot of high ticket (note I didn't say "high end") eyewear.

I'd love to see the rents for the surrounding area strip centers, and the downtown area. Locations are key, but if there's a need, and you're good, you'll become a destination, and won't be held down by $50,000 rents.

[Uni-Clip]

Spend a full day, better a weekend and a weekday, in front of the existing optical store and check if they are really busy. Otherwise, you are just a "tool" of the mall's replacement strategy. Don't trust the floor traffic data, especially if it's provided by mall management. Trust your own eyes. Also, $4.2K seems quite expensive for a low end mall but depends where you're located?

Lak Cheong
www.freeformeyewear.com

[allanon]

Mall hours suck :) There's my 2 cents.

[Johns]

Spend a full day, better a weekend and a weekday, in front of the existing optical store and check if they are really busy. Otherwise, you are just a "tool" of the mall's replacement strategy. Don't trust the floor traffic data, especially if it's provided by mall management. Trust your own eyes. Also, $4.2K seems quite expensive for a low end mall but depends where you're located?

Lak Cheong

Exactly!

Also, Alanon said that mall hours...uh, don't agree with him.

Besides the fact the hours aren't to most optical's liking, you are usually obligated to staff your store when they tell you. That includes Sundays, Holidays, and any other day you might not want to be there, but will be paying staff to be.

Figure that in to the overall price as well...

[Fezz]

First store...hmmmmmm.


How many pairs of specs, cleaners, Jolly Ranchers or whatever, must you sell JUST to cover rent?

How about staff?

Is your insurance rate going to be higher based on that location and the potential for maybe greater liability?

What anchor stores?

How does that rent break down, or compare to the area? Is $5 and change per sqyare foot average for your area?

What does your accountant think?

Better yet, what does your lawyer think?

[For-Life]

With lower and mid end you will need to do volume (which exams will help with). Also, consider what type of insurance plans are situated in the area.

[890890]

Thank you! I'll take some hours to see how're things going beside the existing shop...

[Johns]

While you're there, talk to the managers of the other stores. Tell them who you are, what your thoughts are, and how sales are. Find out all the pros and cons and use that when /if you approach the mall to negotiate the lease.

Also, look to see how many stores are vacant, and in what part of the mall. Are they concentrated to one area, are the empty stores spread around? This could indicate bad locations in the mall, or a bad mall.

[Fezz]

Johns brings up some very good points!(as usual).

Ask the management what building, or expansion plans are taking place. How will your area of the mall be affected.

The management is there for a reason=Too make money.
They are selling "real estate". It is really no different than a frame. You want to move a frame(or 800 frames!). They want to move floor space!

[Fezz]

How long are you tied into the lease?

Early bail out fees?

What are the renewal terms?

Utilities, etc-negoitiable?

[HarryChiling]

All great points, the few points I can add are:

• Who's your competition, LC, Sears, Wallie, Pearle?
• Could you get a non compete clause built into the lease so no more new optical locations could open in the mall?
• How do you differ from the competition or are you trying to mimic the same?
• Was the first offer $50k? Is the location desireable?

New stores are tough and you should expect a struglle as you are inevitably going to take business from the surrounding opticals in the area. Be prepared to float yourself for a number of years if possible. Remember you make your money on your purchases not on your sales, I say this because we all pretty much sell the same thing but some of us do it smarter. For instance Johns and Fezz seem to think buy low and sell high is a great idea (I don't knwo where they get those hair brained ideas from).

[1968]

Don't forget to add $40 to $80 per square foot on your build out. How much of that will the landlords pay?

[890890]

I'd find out how badly the mgr "would like" to add one more OD store. (and why) Let his pencil do the talking with adjusting the bottom line.

The mgr mentioned only 2 optical stores allowed in this mall. They used to have 2 stores but 1 just moved out(they didn't tell me why). It's OD store as well... So the reason they want to add one more becomes clear and they prefer me to stay in the same location. This one I don't want to take because it's 1700SF and the rent is over 10K/month.


Why do you want to get in? What kind of numbers are the other guys doing.

I notice the OD office is on 2nd floor(only for professional office) and the optical store is far away from it(in different floor). I couldn't know how they're doing, but seems like they're not busy.

[890890]

Also, look to see how many stores are vacant, and in what part of the mall. Are they concentrated to one area, are the empty stores spread around? This could indicate bad locations in the mall, or a bad mall

Thank you for the suggestion. This mall is not newly constructed, but probably 5% - 10% spaces are vacant. The Mgr told that they just made expension and new spaces will be added later. Beside the one I like to take there're 2 more empty stores(one over 1200SF, one over 4000SF) around it. The good thing is the community library and entrance is closed to me so it attracts some people. I don't know if it's a plus.

[1968]

They used to have 2 stores but 1 just moved out(they didn't tell me why).

THAT is an interesting point. See what the landlords have to say and, if possible, see what the previous tenant has to say. I doubt they moved out because they made enough money and decided to call it quits.

[890890]

THAT is an interesting point. See what the landlords have to say and, if possible, see what the previous tenant has to say. I doubt they moved out because they made enough money and decided to call it quits.

So why they still decided to call it quites if they could make good money??

[obxeyeguy]

give it up, now.