Swedish fashion chain H&M is on a mission to demand contracts with variable rents, which can go up or down depending on the store’s turnover. However, the chain wants to deduct returns in that store, angering real estate owners.
Variable rents
H&M is busy trying to lower the rents it has to pay, and one of the ways is to make deals depending on the store’s turnover – a move that the chain pursues most diligently in the United Kingdom. Apart from the turnover, service costs would also define the rent price, The Times writes. H&M says it would be willing to pay the owner 15 to 20 % of a store’s turnover, Mds found out.
An extra difficulty in the negotiations however is the precise definition of “a store’s turnover”: H&M wants to deduct all the returns that were brought back to the store from that turnover. The store owners are not too keen on doing that, because that would effectively mean that they woud pay for the high return costs of H&M’s e-commerce business.
