Power and Channel Conflicts in Shopping Center Development

Abstract

RECENT legal actions relative to the shopping center development process provide a meaningful focus for channel power and conflict relationships in this process as well as for the changes that are likely to affect all parties involved with it. Some recent actions are: (1) Federal Trade Commission (FTC) restraint of trade complaints, one against a Virginia regional shopping center and three of its major tenants, and another against Gimbel Brothers; (2) a Justice Department investigation of shopping center leasing practices; and (3) a number of miscellaneous items, including private class action suits by a gift shop franchisor against several of the nation's largest shopping center developers. Power and conflict issues often have an important effect on the efficiency of marketing operations. Conflict in this context is usually defined as a process of change that causes realignments in relationships between channel system members. Channel decisions tend to be long-term decisions, and the development of channel relationships involves much economic and psychological investment. Because of this investment, it is in the interest of all parties to maintain cooperative relationships if at all possible. Conflict that occurs between tenants and developers of shopping centers arises, at least partially, as a result of the process of shopping center development. The shopping center developer seeks to choose and obtain, at satisfactory rental rates, those tenants who will provide the greatest amount of customer satisfaction. He also wants to lease to those tenants who will create an image for his center that will maximize center traffic and thus sales for the total project. This factor typically is also the basis on which financial institutions judge the merits of a shopping center developer's mortgage. As has been stated: