Another one bites the dust at the Miller Hill Mall. On Saturday Trade Secret officially began their going out of business sale at their Duluth store at the Miller Hill Mall. Items were marked between 30% and 50% in an effort to sell as much as possible before their closure in the end of April. The reason for the store closing? A new lease couldn't be negotiated with the mall. The store said that the mall hiked up their new lease rate and that if they were to sign it unfortunately would be at a rate where it would be just too expensive for the store to make a profit, let alone stay open. Trade Secret has been located in front of Younkers for 10 years. All employees will be laid off.
Let's dive into this closure. What could be the reason the mall hiking the rent up for this particular space? Three things.
The first is that the mall could have a new tenant who has been eyeing the space for their store. They may be a larger national tenant who can afford to pay a higher rent, however they cannot kick the current tenant (Trade Secret) out of the space. So in order to be able to locate their store in the space, they negotiate with the mall a new higher rate in which the new store will be able to pay. Usually the rate is so high that it ultimately forces the closure of the current store in the space, thus opening the space up for the new national brand. Now Trade Secret is still national, but unfortunately they as a company have not been doing too well these past few years. Trade Secret originally was owned by Regis Corporation, but was sold when the company started to unperformed. The new company who owns Trade Secret unfortunately does not have the financial backing that Regis Corporation would if a rate hike was to be initiated.
The second reason is that the mall could be raising the rent in order to make improvements to the mall itself. Whether those improvements be cosmetic improvements to the interior commons areas, or mechanical and structural improvements, they all cause an increase in rent. One reason they may be raising rent is in order to pay for the renovation of the Great American space into two new spaces. Yes, although it is unfair, all tenants in the mall must help out because ultimately the new stores that will be put into place in the new renovated space will help their business in the end. And also the mall does require all tenants to remodel their space or relocate when signing a new lease, so that too could have played a factor into Trade Secret not be able to sign a new lease.
And finally, sometimes the mall has exclusives on tenants. For instance, Regis may (and this is probably right) have an exclusive lease on the mall stating that they are the only brand that is allowed to open a hair salon in the mall. That would make sense because Regis also owns Mastercuts and use to own Trade Secret before they sold the company. When they sold the company Trade Secret was half way through their lease, thus now making Trade Secret not a Regis brand (at least in the U.S, they still are in the UK) and therefore going against the exclusive lease, ultimately causing their closure.
Whatever the case maybe, Trade Secret is closing it's doors. When asking if they would relocate in the mall or somewhere else in the Duluth, the answer was "No, this is a permanent closing). So visit the Trade Secret soon in order to receive the best deals and keep your eyes open to see what exciting retailer may fill it's space next!