How to Rent Space in a Grocery Store to Vendors

Grocers can rent space to vendors using two basic approaches. In the first, vendors pay to have their products placed in a specific location in the store. The second option allows vendors to come into the store to do product demonstrations or talk directly with customers. When you rent space, you'll need to consider the effects the new vendor might have on your business and ensure that you codify both parties' expectations in a well-written contract.

Before you begin negotiations with a vendor, you'll need to discern her plans for the space and decide whether she fits within your business. A company that wants to create a bright display for selling potato chips, for example, might not fit well in a natural foods store. If you have a high-energy environment at your store, a vendor offering demonstrations and lots of excitement might fit in nicely.

Your customers may judge you based upon your vendors, so it's wise to confirm the product is consistent with your image and business goals. Do some research on each vendor by consulting the Better Business Bureau and Federal Trade Commission to ensure they have not scammed consumers or offered faulty products. Consider trying the products yourself to confirm they meet your standards.

Consider how the vendor, as well as her vending plan, will fit into your business. A live demonstration can attract customer attention, but if it blocks the entrance or the vendor harasses customers, you could lose sales. Your vendors should build upon, rather than undermine, the environment you've created. You'll also want to consider whether the product will increase your customer base. A new brand of milk might not be of much use, since most grocery stores already stock plenty of milk, but a beauty product could add to your offerings.

A good contract should clearly outline the responsibilities and expectations of both parties. Address how long the vending agreement lasts, what you're charging the vendor and whether profits will be split. Define any conditions under which the contract can be cancelled and any preconditions the vendor must meet before she can sell in your store. Don't neglect legal issues, such as how conflicts will be resolved. State whether the parties have to go to arbitration and whether lawsuits must be filed in a particular district.