Is this good business sense?

[Accy cyclist]

Talking to a shop owner who makes her own ladies hats, fascinators and children's clothes today we got onto the subject of empty shops and shops to rent. The shop next to her's has been empty for around 9 months since the previous tenant moved across the road. She told me that although the shop is empty it's not for rent as the previous tenant is renting it! Why rent it when they now have a new premises (they have a pie and cake shop by the way) i asked. She told me that the previous tenant rents it to stop anyone opening up a business similar to theirs. She also said the rent is nearly £800 a month, adding that the pie and cake shop makes around £3000 profit a month. By the way, she (ladies/childrens clothes shop owner) knows all this as the pie and cake shop owner has told her. Is it worth paying an extra £800 a month to safeguard your £3000 a month profit? 🤔

 

[PeteXXX]

It's on a smaller scale, but the big supermarkets have been known to do similar. If there's a plot of land near their superstore, they might buy it to stop competitors setting up in opposition.

 

[Accy cyclist]

It's on a smaller scale, but the big supermarkets have been known to do similar. If there's a plot of land near their superstore, they might buy it to stop competitors setting up in opposition.

There's an Aldi and a Tesco across the road from each other near to where i live. I can't remember which one it was, but the first to appear 'strongly objected' to the other being allowed/built.

 

[BoldonLad]

It may not be very ethical, but, in business terms, if the cost of keeping the competitor out is less than the profit they would lose if a competitor moved in, then, It makes business sense.

Not a very sensible approach (IMHO), very difficult to accurately estimate the business which would be lost to a competitor, why not have faith in your product, and, out compete them?

 

[HMS_Dave]

£3000 of actual profit for a humble pie and cake shop is very reasonable indeed. It stands to reason that if a similar competitor opened up a shop nearby then i would wager that the £3000 profit hit would be significantly more than £800 per month extra expense. If a national bakery chain such as Greggs were to catch wind of that place knowing her market and profit, they'd be there in a heartbeat... The benefits don't stop there, if she were to consider expansion, say into the sandwiches and lunch market or open a cafe or whatever, then the premises is already there...

She seems to have her head screwed on, this country needs more like her...

 

[Accy cyclist]

It may not be very ethical, but, in business terms, if the cost of keeping the competitor out is less than the profit they would lose if a competitor moved in, then, It makes business sense.

Not a very sensible approach (IMHO), very difficult to accurately estimate the business which would be lost to a competitor, why not have faith in your product, and, out compete them?

Yes, their old shop which they're renting is half the size of their new one and the kitchen/preparation area is 'poor' according to those who're paying nearly 200 quid a week rent on it. They mustn't have that much faith in their ability to see off any competitors if they have far better premises to prepare and sell their goods from!

 

[ClichéGuevara]

They could sub-let it to an unrelated, or better still complimentary business to cover the cost.

 

[Accy cyclist]

They could sub-let it to an unrelated, or better still complimentary business to cover the cost.

I reckon there'd be something in the rental contract about any sub-letting breaking their tenancy agreement.🤔

 

[oldwheels]

It may not be very ethical, but, in business terms, if the cost of keeping the competitor out is less than the profit they would lose if a competitor moved in, then, It makes business sense.

Not a very sensible approach (IMHO), very difficult to accurately estimate the business which would be lost to a competitor, why not have faith in your product, and, out compete them?

There is often a finite amount of money available in a given area. Any competitor can affect turnover. We had a shop and turnover was affected by the number of other businesses in the area. It was obvious that our turnover rose when a competitor closed and fell again when somebody else opened up.
One day sales which were much in vogue then also had a massive effect on turnover. We countered this by starting our own one day sale sideline.
Retail can be a cut throat grab what you can while you can as everybody else is trying to grab as much of you turnover as they can.
Don’t let me get started on the business ethics of the coop.

 

[Accy cyclist]

Here's a thought. If they're making £3000 a month profit, why not make an offer to buy the empty shop. It's a bit run down. I bet it won't be much over £100,000.🤔

Edit...Heck, way over estimation! This one just up the road is much better and only 30 grand!!!
https://www.primelocation.com/for-s...h_identifier=4b61f82ec791804ced8f234013af1d5a

I know the owner fairly well. maybe i could buy it and turn it into a 'fine tweeds' shop!

 

[ClichéGuevara]

Here's a thought. If they're making £3000 a month profit, why not make an offer to buy the empty shop. It's a bit run down. I bet it won't be much over £100,000.🤔

Edit...Heck, way over estimation! This one just up the road is much better and only 30 grand!!!
https://www.primelocation.com/for-s...h_identifier=4b61f82ec791804ced8f234013af1d5a

I know the owner fairly well. maybe i could buy it and turn it into a 'fine tweeds' shop!

That price is for a three year lease.

 

[Accy cyclist]

That price is for a three year lease.

Ah, you aren't buying the actual building then?

 

[Chromatic]

This time next year @Accy cyclist'll be a millionaire!

 

[markemark]

Makes no sense. Unless there’s only 2 shops for miles then occupying just one is a waste of money. Even more so, having competition open up close by can often increase footfall which is good for business. There’s a reason why Chinese restaurants open up in Chinatown. Lots of competition. It’s also a destination.

 

[Ming the Merciless]

Pietown , the place to go for your night out!