RENT ISSUES AND BUSINESS PROSPECTS OF FASHION CHAINS

Abstract

The retail market has been facing a slump for the past few years, as can be seen by many retailers suffering losses and others ceasing operations. The current economic downturn has only made retail conditions worse than before. In view of these conditions, this study seeks to examine the effect of economic conditions on the ability of fashion chain retailers to pay rent, as well as the effectiveness of non-rent incentives given by the landlords. The study also seeks to evaluate the business prospects of the retail market from the point of view of the retailers and a few landlords. The findings show that although shop rents have fallen due to excess supply of retail space vacated by retailers, as well as poor market conditions, retailers still find rents expensive in relation to sales turnover. Fashion chain retailers are especially hard-hit because their sales have fallen due a shift in consumption patterns. A reduction in disposable income because of pay cuts and retrenchments meant shoppers are spending less on clothes and other non-necessities. To improve their ability to pay rent, the retailers have to restrategize and try new avenues to improve sales turnover. This is essential to survive through the difficult retail conditions, as well as to ensure that they can keep paying rents without incurring losses.