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Rules of shop in shop to Commercial real estate

The development of Domestic commercial real estate is explosive. The mode, such as Single mode, lake of creation, residence support trade, emphasizing on sales and adopting main stores in the shopping mall jewelry kiosk design, has become a main stream.
According to the statistic, the top 10 cities of the worldwide biggest shopping center area have currently seven of them located in china, with listing Tianjin, Shenyang, Chengdu as top three worldwide. Until the end of 2011, china had built 276 new shopping centers (shopping mall)and made opened totally 2,812 shopping mall  nationwide and commercial building area reached 177million square meters.it is expected that shopping centers will increase at a speed of 300 every year and will reach to 4000 in total in China 2015.In terms of investment, nationwide shopping center would hopefully heap up a breakthrough of one thousand billion RMB.

A short term and local oversupply in market had made the main shop featuring suppermaket and department stores become a favorite to the real estate developers. So the unconscious rule of the big bulling the shop has intensified increasingly.
Simply speaking, however, the unconscious rule of shop in shop in commercial real estate means that as a “second-hand landlord” the supermarket and department stores can take the rent benefits of from developers through cutting down the price.shopping-mall-jewelry-kiosk-design

First, being principle tenant supermarket can start an economy thought to exploit more consumers and reduce costs. Currently in the running cost of supermarket formats, such as Supermarket and convenience store, rental costs account for 30%-50% and will rise astonishingly when lease expire.
For example, a cup of Starbucks cost 28RMB, in which its cost structure includes 9.4 RMB of advertisement, utility and maintenance, making up 33.7%, 5.6 RMB of rent, making up 20.0%……ingredients making up 14.3% and benefits making up 9.5%……
Again, such as a standard store with area of ten to twenty thousand square meters, according to a calculation of current daily rental of about 30 to 50 RMB its annual rental vary from 5 million to ten million, in which daily utility costs ten thousand RMB, labor about fifteen thousand, rental about twenty thousand and rental accounts for around 44% of total. However, since gross margin for the store generally only accounts for 10%, the daily turnover needs to gain at least such amount of four hundred and fifty thousand RMB that it can have a breakeven. Yet many stores only gain their turnovers to be over three hundred thousand or even lower to about two hundred RMB.
And when supermarket moves in the combination project, it will usually have its rented 25% area subleased to other merchant. Since flow of people in supermarket is big, the rental of sublease can easily be doubled and even as twice over as the original. Owning to featureless property and short of skills to negotiate, individual developer even suffer an area cut of more than twenty thousand square meters by supermarket, of which range of daily rentals is 20 to 50. Just needing to be a principle tenant the supermarket can easily gain a guaranteed profit, rather than just depending on goods spread, entry fee and so forth to make profit.

For consumers the advantages of this kind of shop in shop supermarket can help commercial forms realize richness, in which odor temptation, commodity experience and live crowd watching add a lot of enjoyment to the shopping trip. In terms of each retailers, opening their own small shop in supermarket can share a mass of influx. In terms of the developer, it is both favorable and derogative. On the favorable side it can boost its publicity with the help of the main shop, while on the other side the largest share of profit is gave away to the supermarket, which turn out letting other man snore beside his own bed!
This kind of large business super, such as RT Mart, RenRenLe and Carrefour, is successful project of shop in shop supermarket. The shop in shop scale is generally 3000 to 8000 square meters, which is similar to a pint-size department store and mainly running the retail business, amenities and light catering activities. The commercial activities of its main shop feature the ladies’ department, sportswear, cosmetic, house furnishing and shoes and bags and so on.
Main shop investment attraction has both advantages and disadvantages, yet the key lies in weighing gains and losses and finding out a development mode suitable to the enterprises’ own conditions. In the residence field, the developer would become one true superpower after access to land and dominate an entire industry chain, but in the field of the commercial real estate access to land just the first step within long journey. It not only have to deal with regular work, such as location, design, transport management, but also negotiate in contest in turns with the world top 500 company, such as Walmart and Carrifour. Even a KFC store 400 or 500 square meters is equipped with a nationalized team to back up. On this occasion, developing enterprises can really experience the signs of powerful customer bullying shop, dragon in the shallow water, tiger leaving mountains……


Post time: Jun-03-2017

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