Recent bankruptcies from legacy brands such as Neiman Marcus and J. Crew reveal the importance of maintaining manageable debt levels and strong balance sheets. The coronavirus outbreak has also put a spotlight on how important physical stores are in the market. Despite online sales growth of 40 to 50 percent, e-commerce still garners less than 15 percent of total retail sales.
In the brick-and-mortar realm, COVID-19 also revealed the interdependency of brands, retailers and landlords as well as consumers. And as retailers slowly begin to execute plans for opening stores, industry leaders are pondering new ways of doing business.
For Jay Norris, chief executive officer of Guesst, his company’s software can serve as a platform for what he humbly describes as an “amicable leasing solution.”
Simply put, the software is designed to provide a transparent, sustainable business solution where brands and landlords both walk away winners. “As we gain our footing in this new retail normal, landlords and tenants alike are seeking creative solutions to their shared problems — flexible, percentage-based leases that can benefit all parties involved,” Norris told WWD. “Guesst Software has created a lease modification program that helps landlords and retailers lean in on sustainable partnerships during the pandemic era through percentage rent leases.”
Guesst’s “percentage rent and sales reporting management system” is deployed to have retail tenants, brokers and landlords all share the risks as well as the rewards.
Norris said the software and business model was born out of a need for more flexibility in the market. He noted that percentage rent agreements are increasingly becoming more common. “But landlords are struggling to accurately verify the sales performance of their tenants,” Norris said.
In response, the Guesst software solution “connects directly to a retail or restaurant tenant’s POS to track and report net sales on a daily basis at each location,” the company stated. The solution also calculates and reports on the percentage rent as well as accommodate “various types of percentage rent agreements.” Guesst also facilitates the e-transfer of funds from tenants to the landlord, and can “calculate and transfer monthly commissions to leasing brokers.”
For landlords, the benefits of the platform include offering tenants a tool designed to implement a creative lease solution. Landlords can also track the daily sales performance of their tenants and the platform allows them “to participate in the upside of their tenants’ success.”
For tenants, the benefits include fixed rent costs that are converted to variable costs (based on net sales) as well as improving cash flow — factors that can help a business grow. Other benefits include an arrangement that opens a market to “a broader base of tenants,” the company said.