Many of us are looking at renewals for our storefront leases, or maybe just feeling the pinch of shifting customer habits. We’re all trying to figure out how to keep our businesses thriving when so much of retail has moved online, even for those of us who depend on foot traffic. The challenge isn’t just getting people through the door; it’s making sure our physical space works seamlessly with how our customers prefer to shop, whether that’s browsing online first or picking up an order they placed from their couch.
Why Omnichannel Matters Now
A recent piece from Hike POS reminds us why this integration of online and offline sales, often called "omnichannel retail," isn't just a trend anymore; it's an expectation. The article highlights that customers today anticipate a fluid experience: they want to buy something online and pick it up in our store, return an online purchase to our physical location, or even check our current stock levels from their home before making a trip. The authors point out that if we don't offer these kinds of conveniences, our customers are likely to take their business to competitors who do. This isn't about being a big box store; it's about meeting basic customer service expectations that have evolved with technology. For small businesses like ours, it means making sure our online presence and our physical storefront aren't just coexisting, but actively supporting each other.
What This Means for Your Lease
This push for omnichannel functionality has real implications for our commercial leases and how we operate our storefronts. Many of us signed leases years ago, before online ordering and in-store pickup (BOPIS) were common, or at least before they were a critical part of our business model. Now, landlords might see our use of the space for online order fulfillment as a different kind of activity than pure retail sales, potentially leading to issues with our "permitted use" clause. If your lease specifies "retail sales" and you start using a significant portion of your back room for packing online orders, a landlord could argue you’re operating a warehouse, which might violate your lease or trigger different rental rates or common area maintenance (CAM) charges.
We’ve also seen situations where landlords try to calculate percentage rent based on *all* sales, including online orders fulfilled from the store, even if the customer never physically enters the premises. This is a critical point to negotiate. If a customer buys from your website, and you ship it directly from a warehouse or another location, that sale shouldn't be tied to your storefront's percentage rent. But if you're using your storefront as the fulfillment center for those online orders, or for customer pickups, landlords might argue those sales are attributable to the physical location. We need to be clear in our leases about how "gross sales" are defined for percentage rent, specifically excluding online sales that don't involve the physical premises, or at least clearly defining what portion, if any, is attributable to the storefront for BOPIS.
Furthermore, consider the physical changes you might need to make for efficient omnichannel operations. Do you need a dedicated pickup counter? More storage space for inventory waiting for pickup? These changes could fall under "alterations" clauses in your lease, requiring landlord approval, which can be a slow and costly process. Even something as simple as signage for "Online Order Pickup" might need to be approved. We also need to think about increased utility usage, particularly for electricity if we're running more computers, scanners, or climate control for stored goods. While usually a minor increase, it's another factor in our operating costs.
Next Steps for Your Business
Take some time this week to reread the "permitted use" clause in your lease. Does it broadly allow for "retail sales and related activities," or is it very narrowly defined? Also, look closely at how "gross sales" are calculated for percentage rent, if applicable, and consider how online sales and in-store pickups might factor into that. Think about the physical layout of your store and if any changes for omnichannel operations would require landlord approval under your "alterations" clause. If you're approaching a lease renewal, these are prime discussion points to bring up with your landlord, ensuring your lease supports, rather than hinders, your modern retail strategy. And as always, share your experiences and questions in our community forum – we learn best from each other.