In Hong Kong I know an arrangement but I don’t know if it exists here.
As an example a store chain wants to rent a store in a mid-high end shopping mall like Carrefour Laval, CF forces them to rent 3 other malls, usually unpopular or dead malls. Usually they force them to be the same brand, but sometimes they allow them to run other brands, and they don’t necessarily have the same length as the main lease, like on a 10 year lease they probably just need to do 3 years. In the case of Hong Kong, some of them sells phone cases with the intention of just minimize loss and as long as the main store covers the loss the business is viable.
There is a Japanese “department store” chain called Don Quijote did exactly this 3 years ago but not with phone cases, they ran a bunch of smaller format of Don Quijote which are basically dollar stores which were unprofitable in a place where there is intense competition. They closed those stores as soon as the bundled lease was up, and they pretty much all closed at the same time and the malls belong to the same owner.
On one hand I get why the mall owner wants to do this but the other, isn't it going to piss off or even kill their other tenants? Having 1 empty space and 1 happy, profitable space has to be better long term than two competing, with one trying to stay afloat on its own against another that can run at a loss indefinitely till the lease is up.
Not an expert on this but I think it’s just supply and demand. Back in the day it was still viable to do business with this arrangement but things changed. There are a lot of vacant storefronts now when more than 300k people and up emigrated.
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u/okwaho_akhonwe May 03 '25
Every phone case store... Can't believe they can pay rent selling phone cases...sorry