THE more traditional model of leasing property, when it comes to retail small business, is not the only way to build a successful business. Nowadays, there are lots of options when it comes to leasing retail space - different ways to try and get more value for your buck and earning a dollar in a more non-traditional way.
Three of those non-traditional options are the Consignment model, the Lease Me model, and the Pop Up store. All three are being tried at various levels around Australia at the moment.
Commercial Property Guide takes a look at all three models.
The Consignment Model
The model for a consignment store is simple. The owners of a consignment store sell a product given (or consigned) to them, more often high end products such as shoes or handbags - and take a profit after it sells of between 10 and 20 per cent.
One of the more successful consignment stores in Australia is the Secret Sneaker Store. It opened in Melbourne in May 2017 at Melbourne Central and immediately proved to be a success. The Secret Sneaker Store sells high end sneakers, shoes and apparel.
Owner and director Edwin Low outlines the advantage in having a consignment store, “When we started we didn't have enough money to buy inventory. We would have needed about $300,000 worth of stock and we just didn't have those funds.”
"So we found the consignment concept. It’s well established in the USA but not so much in Australia. We found we can sell other people's shoes, and there really is a market.”
"The way it works, is people bring in their special edition shoes, we create an account and put them on the shelf, and when it sells we get 20 per cent and we transfer 80 percent to the sellers bank account."
Low, who recently opened up a second store in Sydney, believes the consignment model builds trust with his consumers especially when it comes to high end goods and collector items. Often online and Facebook consumers can get scammed with fakes.
The Lease Me Model
Lease Me founder Justin Levy describes his concept as something that allows start-up fashion brands to grow their physical retail presence.
"I describe the platform as an online community and incubator," he said.
"We nurture Australian brands from entry-level shared space through to seasonal pop-up stores and eventually on to long-term commercial leases," he said.
For example one of Levy's biggest success is the 100 Squared Emerging Designer Market, with utilises vacant retails spaces and converts them to mini pop up shops for start-up designers. There are six locations around Australia.
"In recent years we've seen such a dramatic shift in the overall landscape of retail," Levy said. "What brands and retailers were forgetting was that traditional bricks-and-mortar shopfronts will always be in vogue. Strip-mall and destination precincts are a cultural habit, and that will never change."
The Pop Up Store Model
In the last few years pop up stores have been literally popping up everywhere. It might be anything from Kanye West opening a store for a few days in Melbourne while he is in town, or stores around major events like the Australian Open tennis, or any number of festivals around Australia. Major designers also use the pop up model when it comes to clearance sales, outside their usual retails space.
The concept works for online retailers or brands with a large social media following, who want to generate some extra buzz.
More and more landlords are now open to the idea of the pop up model. According to The Storefront website, temporary retail or pop up stores generate $80 billion in sales in the United States every year.
The US website enthusiastically goes on, "Bear in mind that finding temporary commercial real-estate used to be a lot more difficult to find, but with property owners and real estate agents trusting and understanding the true value of pop-up to their locations, there are increasingly options 'popping-up' all the time."
With so many options, one of our recent prime ministers could have said, “There has never been a better time to be a start-up retailer.”