As billions of dollars in goods go unpaid, this leaves debtors and lenders in a position unlike ever before. Authority Magazine and Thrive Global turned to Partner Victor Sahn to get his insights on how large retail outlets are adapting to the new realities caused by the pandemic. Sahn explained that the relationship between tenants and landlord mall owners has radically changed as they aim to preserve the retail industry.
“Two major things that retailers have done are (1) negotiate with landlords that payment of rent going forward will be calculated as a percentage of actual sales rather than on payment of monthly contract rent. In that way, the landlords and retailers are partners, and the landlord is motivated to get customers into the malls so that the sales take place and rent as a percentage of those sales gets paid; (2) retailers have approached vendors and required them to extend credit terms on much longer time frames than 30–45 days that was previously the practice,” Sahn commented to Thrive Global.
With large retailers already struggling to meet consumers evolving demands as shoppers shifted more toward online stores, Sahn told Authority Magazine: “The Coronavirus has been a significant accelerant of the brick-and-mortar demise and likely has created damage in terms of loss of sales and customer traffic that may never be recovered. Also not factored into this are the habits of young people who are 40 years old or younger. These are becoming the customers of today and tomorrow and their perceptions and habits are completely different in my view than those of their older family and citizens.”
Read the Thrive Global article here.
Read the Authority Magazine article here.