The 3 Biggest Challenges in Retail Lease Administration from Insights 2019
Insights 2019, Accruent’s annual customer conference, brought together more than 800 users, decision-makers and industry leaders from around the globe.
We heard stories across industries about challenges and success, from accelerated adoption to maintaining compliance. As companies face more regulations, increased need for accurate data and significant shifts in real estate, it is becoming clear that organizations require a robust and proven lease accounting solution.
Here are the three biggest challenges shared by our retail customers at Insights 2019, and how our lease administration and accounting solution, Lucernex, is meeting those challenges head-on:
Challenge 1: Extracting data efficiently and accurately.
When a retailer has thousands, or even millions, of data points about their stores, store locations and their leases from all over the world, it takes a powerful tool to not only house that information, but also be able to extract the relevant, accurate information needed to make better business decisions.
Additionally, when new stores and leases are created, organizations need a system that has a simple, intuitive interface that allows for inputting new data points. From details in lease abstracts to restrictions for merchandise categories to location-specific information, granular data is a necessity for efficient management and smart decision making.
At Insights, we heard from Accruent customer Genesco, a specialty retailer with more than 1500 retail stores worldwide. Before using Lucernex, Genesco did not have an organization-wide system for tracking and controlling lease management and accounting. This created inefficient lease negotiations and processes. After implementing Lucernex, Genesco gained synergized workflows across departments, creating comprehensive end-to-end processes while improving collaboration throughout the store lifecycle.
By creating a system where data was quickly input, tracked, pulled and organized into meaningful insights, Genesco was able to maximize profitability through a more efficient evaluation of potential risks and liabilities.
Challenge 2: Online only retailers seeking spots in brick and mortar stores.
The upward trend in consumers moving toward purchasing from online retailers cannot be ignored. According to a 2019 poll by Marist College and National Public Radio (NPR), 25 Online Shopping Statistics That You Should Know, 76% of all US adults are shopping online. By 2023, it is estimated that over 300 million US shoppers will be doing their purchasing online, detailed in the Statista report "Number of digital buyers in the United States from 2017 to 2023 (in millions)".
What do these trends mean for brick-and-mortar retailers?
For some retailers, it means expanding their online presence, while also right-sizing and getting the most out of their current locations. For others, it means that online-only retailers may seek brick-and-mortar store placement to better compete with existing concepts and give their customers a place to interact with their merchandise and services.
Going even further, some retailers are experimenting with miniature, in-store concepts by leasing small areas of large footprint stores to give consumers a place to interact with their products. According to a consumer survey from Retail Dive, "Why many shoppers go to stores before buying online", 55% of shoppers visit a retail store before purchasing online, and only 10% of US consumer spending is done online, cited by the US Census Bureau.
All of these different methods for introducing new store concepts and adapting to consumer trends brings unique needs from the retailers we serve with subleasing and dynamic leasing. Lucernex’s subleasing and dynamic leasing capabilities make this process easier to not only implement, but also pull relevant data to evaluate whether a sublease contract is what makes the most sense for the retailer and their potential lessees.
Challenge 3: Landlords are part of the evolution, too.
While retailers are evolving their lease accounting structure to meet the needs of an ever-changing market, landlords need to be flexible, too.
As retailers adapt to online shopping, landlords must also adjust by looking for different ways to lease out their spaces. Unconventional tenants, mixed-use spaces and subleases for online retailers are just some of the trends and practices landlords will need to get more comfortable with to stay competitive in the market.
In an article from VTS discussing trends ICSC ReCON 2019, "4 Trends Retail Leaders Talked About at ICSC RECon 2019", landlords are described as now needing to take into consideration how multiple retailers in a space complement one another, and how those retailers fit within their communities and neighborhoods.
“As landlords are increasingly tasked with responding to communities’ visions and values, whether honoring a neighborhood’s existing heritage and culture or carefully crafting the fabric of a new neighborhood — there’s an opportunity (nay, an obligation) to partner with local leaders, and residential and office developers to create destinations that seamlessly blend uses and tenants.”
Getting compliant and moving forward.
Whether adapting to the ever-changing retail experience or racing to keep up with FASB compliance and regulations, retailers now more than ever need a system that not only organizes and reflects their data, but also drills down into trends and resources to help drive better business decisions.
Accruent’s Lucernex solution automates your lease administration and accounting for real estate and equipment, creating a data repository and a single source of truth, providing transparency into your entire lease portfolio and allowing you to make better decisions faster.
See how we can support your business in meeting these retail challenges. Schedule a demo today.