News and Events
Cut Occupancy Costs
Chain Store Age recently devoted its entire April issue to dollar-saving strategies in operations, technology, store development, facilities management and real estate. RCS Real Estate Advisors Senior Vice President Mitch Friedman provided smart tactics for saving money on real estate.
Apr 20, 2009 Chain Store Age
Slashing big expense delivers big bottom-line impact. And occupancy costs are one of the biggest expenses a retailer has, in addition to cost of goods sold and payroll. While many retailers are struggling to stay in business, reducing occupancy costs can be a much-needed boost to profitability.
According to Mitch Friedman, senior VP, RCS Real Estate Advisors, New York City, the first step retailers must take when considering the reduction of occupancy costs is defining what the proper occupancy percentage to sales should be in order for the business to be profitable.
"To determine occupancy costs, retailers must first perform a thorough analysis of the entire retail real estate portfolio and evaluate the occupancy-to-sales ratio," Friedman explained. "Once the optimum occupancy percentage is established, each location must then be examined to determine how much its occupancy costs exceed the optimum percentage for viability in order to determine the next step."