Footfall is the new turnover rent

The decision on whether it is worthwhile to operate a bricks-and-mortar shop should be made differently. It no longer depends purely on the turnover of the POS. The store is a point of experience and a builder of trust. For higher-priced products, you have to be on site – this has a significant impact on direct traffic, conversion rate and thus also online sales.

Due to the pandemic, the in-store conversion rates and average shopping cart are higher than ever. I already proposed a traffic-based rental model prior to the pandemic. At the time, the suggestion was not well received. However, for future leasing contracts, greater attention should be paid to ensuring that the sales-based rent is given greater weight. Ideally, rental fees should consist of three components: base rent, turnover rent, and location marketing. With regard to the location marketing component, the landlord adds the same amount out of his own pocket and uses this budget to promote the location on a sustained basis. Thus at least a part of the rent flows into the preservation or the increase of the attractiveness of the location and everyone profits.

Something needs to change in the evaluation of value creation on shop floors. Which KPI do I use to measure the success of a space…it can’t just be sales! Brand awareness and visibility in the physical space, customer proximity, etc. must also be taken into account.

Lead generation is the new revenue rent. The modern consumer buys where and when they see fit. But the point of awareness and interest phase is an increasingly important one. That’s where brick-and-mortar retail or brand space really does play a big role, whether it’s advice or a multi-sensory experience. If the sale no longer takes place where need arises, what is the evaluation criteria for the brands? In theory, all brands know that the modern consumer wants to consume across channels and make free choices. But they still measure their stores to see whether they are profitable, whether they make enough sales, instead of measuring what they do for their customers.