One of the common points of contention in turnover rent leases is whether purchases made online by a customer should be part of the gross turnover of a store. The issue can be broken down into three categories:
1. Pure Online Purchases: Online purchases which are paid for online and delivered to the customer should not form part of the store’s gross turnover unless that purchase is allocated to that store by the retailer business.
2. Online Purchases at the store: Online purchases made using computers within the store (i.e. computers supplied by the store rather than the customers’ personal mobile devices) should count towards the store’s turnover because the purchase is being made in the store. This should apply regardless of whether they are paid for and/or collected in the store. The tenant’s systems should be set up to capture this data.
3. Click & Collect: If the order is placed online but paid for and collected at the store then the purchase should be part of the turnover. However, if a customer makes a purchase online, pays for it online and collects it from the store then the tenant is likely to argue that it should not be part of the turnover. It will argue that collection from the store is simply a saving to the customer of delivery charges so that the purchase would have been made online regardless of whether the store was there and the store acts simply as a “post box” from which the items are collected.
From the landlord’s point of view that purchase should form part of the store’s turnover because the store’s physical presence may have had some bearing on the customer’s decision to purchase online and some of the transaction is being carried out in the store.
Ultimately the bargaining position of the two parties will determine what is agreed but this is a developing and controversial area – as well as tricky drafting territory!