Issue:
All of their locations were leased, many from smaller mom & pop landlords and occasionally from employees or former employees when the location was acquired via a business acquisition. As a result, it was often the case that: 1) Rents had escalated annually and were not necessarily in line with competitive market rents, 2) negotiating with a related party created a potentially sensitive political issue, 3) the landlord knew that moving would be both expensive and disruptive to Gulf South’s next day delivery operations. In addition, each location often had a unique layout and design as there was not a methodical way to transfer facility best practices between the locations.
Solution:
Avocat Group devoted an entire account team with diverse experience to help Gulf South assess the efficiency of each facility. In most cases, this resulted in identifying ways to improve capacity (narrow isles, maximizing ceiling height, designated bulk storage). It could often be shown that a major redesign would provide significant advantages. This, in turn, also gave Gulf South leverage to negotiate with their landlords to demonstrate why a relocation might be a better option and less disruptive than renewing.
Result:
In many cases, the landlords voluntarily either dropped the rental rate or suspended payments to offset the revamping of the space. As an unbiased third party, Avocat was able to share market rate information with the various landlords to help coach them to a more competitive rate in a way that they could understand and did not cause political friction. Additionally, Avocat helped Gulf South to establish a Policies and Procedures manual along with a set of Standardized Finishes that gave them both design best practices and also a consistent brand image.
