CACI releases new retail lease model

A data driven, objective model to help landlords and retailers agree to new commercial leases has been launched by consumer and intelligence specialist CACI.

The launch of this new retail lease model is based on their latest study of consumer sentiment as a result of coronavirus on 3 August.

In light of the Covid-19 pandemic, CACI hopes the model will generate a more open and balanced approach to the commercial relationship between landlords and retailers.

With CACI’s new model, the store’s worth is based on its ability to deliver an engaged footfall, to connect the brand with the consumer, and to unlock consumer spend.

The objective methodology is completely driven by consumer behaviour, rather than the established and opposing positions traditionally found in relationships between landlords and tenants, CACI said.

The evaluation completed by CACI makes it easier to determine rental levels, the form in which they are paid, and what rent is paying for, according to CACI. In turn, this will assist in determining the true value of assets.

Alex McCulloch, Director of CACI, said in a statement: “In many instances, the relationship between landlord and tenant was deteriorating before the onset of coronavirus, but the pandemic has accelerated the breakdown of the old model. The current position, with each side working against one another, rather than with, is unsustainable as brands and bricks and mortar need one another to thrive, least not survive.

“CACI’s new lease model is a solution to the significant challenges facing the sector as it rebuilds. Across the industry we have recognised a lot of movement towards turnover models, but this is not a long-term solution; this approach does not value the multi-faceted role of the store and will mean the start of a downward trajectory for many businesses.

“Instead our approach includes the value of store turnover, but also recognises the role of the store in influencing online behaviours and the quality of footfall a centre can deliver – it is a model which mirrors the shared risk both parties must take on but better values the shared reward,” he continued.

Chris Thompson, Director of Retail at CACI, said: “This new model reflects the new consumer reality and is needed in a post-covid 19 world where visitation in many centres is down over 40 per cent, and customer behaviour is rapidly changing; and with it the role of the store.

“Retailers need to reduce base rent, and fast. By placing a greater proportion of the lease value on the store performance across all channels our approach can, for the first time, give a neutral independent view on what true store performance is across all channels, and accurately value a store based on how it connects a brand with its customers,” he added.

On July 24, CACI released a study: Adapting to the New Consumer Reality.

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