Critically discuss how Apple flexes its muscle when it comes to negotiate rental rates for its stores

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Critically discuss how Apple flexes its muscle when it comes to negotiate rental rates for its stores in malls.

Apple’s enormous gravitational pull on mall traffic distorts the market for mall rents and helps win the iPhone maker sweetheart deals. Apple draws in so many shoppers that its stores can single-handedly lift sales by 10 percent at the malls in which they operate, according to Green Street Advisors, a real estate research firm. In fact, Apple has used its bargaining power to pay no more than 2 percent of its sales a square foot in rent. That compares very favorably with a typical tenant, which pays as much as 15 percent, according to industry executives. In addition to paying a lower percentage of sales for rent, Apple does not pay additional rent if their sales exceed a particular level—a luxury not afforded other retail tenants. Apple opened its first two retail stores in 2001 at Tysons Corner Center in Mc-Clean, Virginia, and in the Glendale Galleria in Glendale, California. As of 2016, it had more than 450 stores in the United States and more than 18 other countries. In addition, it plans to open 25 new stores in China by 2017, bringing its total to 40 in that country. Although the stores account for about only 12 percent of Apple’s total revenues, they draw about 1 million visitors a day.