Share Selling Space with a Complementary Retailer

Is your selling space too large—and therefore too expensive—for your current customer volume? If the shortfalls seem to be only short-term, you could decide to tough it out until your need for the selling space grows again. If the shortfalls seem to be indicating significant long-term trends in your market, this might be a sign to find a smaller store. But if the timeframe is somewhere in-between, one option available to you is to lease out selling space to another retailer for a fixed number of years. Leased departments are a classic retailing practice. For instance, Meldisco Corporation has operated leased discount price shoe departments in Kmart and Rite Aide stores.
     Historically, leased departments were set up in most cases because they bring specialized expertise to the business or, as with the Starbucks outlets in many grocery stores and bookstores, they provide an extra service to the customer. What I'm talking about here, though, is leasing out space in order to pay the bills. A danger in doing this is that you'll move too quickly in desperation and select as a business partner a retailer whose operations will undercut your retailing image.
     Consumer psychology research says this could happen even with bringing in an excellent retailer if that excellent retailer's business is seen by customers as highly incompatible with yours. Help customers understand the ways in which your business and that of the leased department complement each other. How are you building value to the customers in the same ways? Decide what you and your lessee have in common.
     Recently in Northern California, a Mercedes-Benz dealership decided to free up some space so a white tablecloth restaurant well known in the area could set up shop there. What would you present to the consumers as the common element?