Measuring the impact of e-business and m-business on multi-channel retail overage rent in the United States of America

The advent of ‘fusion retail’ has raised numerous concerns of ‘under reported’ internet sales at shopping centres resulting in less reported sales and overage rent. Claims have also been made that ‘fusion retail’ keeps potential customers away from shopping centres causing space vacancies and voids. As most US retail leases contain overage rent, examining the validity of these claims should assist retail investors to make informed investment decisions. Irrespective of whether the concerns are valid or not, institutional change and market adjustment theory expects investors and occupiers to adjust to the ‘fusion retail’ challenge as they have previously done with catalogue shopping. The research suggests sales migration to the internet which reduces overage rent but no deliberate ‘under reporting’ of internet sales. Most existing percentage leases exclude internet sales since they were unanticipated when the leases were signed. Despite the sales migration, ‘base’ rents have remained strong suggesting that ‘fusion retail’ and physical stores are synergistic. New leases are adjusting to include disclosure of internet sales if fulfilled at shopping centres. However, due to occupiers’ reluctance to adjust sales reporting systems, investors are unable to ascertain the accuracy of internet sales generated. Since it is also costly to access the reporting systems, investors rely on occupiers to report internet sales akin to offline sales. To ensure accurate disclosure, investors incentivise occupiers provided internet sales are shown separate from offline sales and meet a specific margin above a sales threshold. Despite the lease adjustment, the research shows a diversion of in-store collections of internet purchases to owner-occupied stores to avoid overage rent payment. Since the diversion does not breach the lease, investors cannot stop occupiers from acting opportunistically. This suggests that occupiers can sign new leases whilst knowing that no internet sales will be subjected to overage rent payment.EThOS - Electronic Theses Online ServiceGBUnited Kingdo