Companies fighting for 20% discount on rental fees

Many of the companies operating on the local market are renegotiating rental agreements for office space or shopping areas in which they are operating, in an attempt to cut costs, as liquidity management has became a must in this financial crisis.

"We launched negotiations related to the rent we pay for several stores. They are no longer profitable. We aim to lower rental costs by 10 percent in the coming two-three months," the CEO of Domo household appliance retailer, Lorand Szarvadi, told Business Standard.

Rental fees are among the largest operating costs for a retailer, along with salaries, and can amount to 8 percent of the sales of large players.

The President of another retailer, Flamingo, Dragos Simion, said the company is negotiating fees for all its rented commercial areas, but success depends on how realistic owner expectations are.

"Pressure by retailers to renegotiate rental fees is felt on the market, in terms of contracts already signed in malls. This is natural, given daily cash-flow of retailers is affected," DTZ Echinox consulting company official Oana Iliescu said. Retailers are not the only companies trying to lower rental costs. Telecom operator Vodafone and Edipresse publishing house are other examples. According to the Managing Director of Edipresse AS Romania, Cristina Simion, the company has not renegotiated rental fees so far, but is trying to do so.

Business Standard