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Bargain Shopper: How to Buy a Store in a Mall

By Richard K Parker

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Published: 30Aug2009
Word count: 569
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A shopping mall typically represents a good concentration of shoppers within a productive environment. As such the thought of buying a store in a mall can be very enticing. By the law of averages, a certain number of all those shoppers are bound to come into your store, right?

Before you go ahead and consider your options it is good to weigh some important considerations.

Firstly, you should begin by taking a close look at the demographics. Your ideal customers should be already shopping in the mall you are considering. Take a close look at the other tenants within the mall - are they dedicated to the same type of consumer and if so, how are these stores doing? You are unlikely to find much success if you are the only store in a mall catering to a particular demographic, for example upscale suburban women.

By and large, a mall is only as good as its anchor stores. While there may be some big box retailers in the mall, stop and think for a second what would happen if one of them went out of business. A locked, boarded store is a bad sign and it is not a harbinger of success for the other tenants. Wherever you can, try and consider a mall that has a number of anchor stores. In times of economic downturn this can help a lot.

You must be sure that your landlord is willing to be flexible. Mall landlords are notorious for including inflexible clauses within their contracts.

You may come up against many problems including crazy requirements that may force you to move the location of your store at a moments notice. Question some of their dictatorial restrictions, including the need to use only their nominated construction companies and electricians. Check to make sure that you can display "for sale" signs in your windows and if you can put "special offer" items outside your doors. Go through the lease agreement with a fine tooth comb and make sure that you are happy with its clauses.

Get your attorney or advisor to check up on the financial health of the mall itself. Find out about tenancy rates, gross revenues and projections. Almost certainly, the information will be available in annual reports and filing statements or you could get this information from the company's website.

The best research you can do is to go in and speak to the other shop owners. You can state you are looking to buy a store in the mall (NEVER tell them which one) and ask about the landlord, business activity, and any other concerns you have.

Before you go too far conduct a complete physical inspection of the mall. This is a good way to assess its financial health, as when things are not going too well you could find that external maintenance is not being kept up. Sidewalks, masonry, landscaping, doors and roofing services should be clean and well-maintained. Parking lots should be functional and well kept and while you are at it, take a visit to the bathroom and food court. Poor restroom maintenance is one of the first signs of a mall in decline. Food court activity is an indication of mall activity.

Your visual tour may not be definitive when it comes to assessing the mall's overall financial health, but it can be a quick way to eliminate some locations from your consideration.

Richard Parker is the author of the How to Buy a Good Business at a Great Price series. As President and founder of Diomo Corporation - The Business Buyer Resource Center, his materials, seminars and consulting have helped thousands of business buyers realize their dream of buying a business. Want to find out more about business buying strategies that really work, then look no further than=> http://www.diomoretail.com

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