Retailers to put rental ball in malls’ court

With Covid cases surging and footfalls and sales dropping in retail, brands are again in rental negotiation mode with malls. The earlier rental concessions ended in December 2020 or on March 31 this year for most retailers. But with the second infection wave dampening businesses by more than 20-50% in many states, some retailers say they will ask malls to move to a pure revenue-share model till the time the situation improves. “I have two stores in Maharashtra, there I will approach the malls immediately,” said Pawan Khandelwal, CEO of premium department store chain Iconic. “Contractually you are bound to pay in full. But malls and retailers have worked together last year… So we are thinking of making requests to them.”Last year, DLF, which operates five malls in the National Capital Region, had offered that retailers should pay 25% of rent in June, 50% in July-September and 75-80% in October-December. Unity Group, which operates several malls in Delhi NCR, had extended rental rebates from the original deadline of December to March 2021 for those retailers and restaurants who were unable to recover 75% of their pre-pandemic business levels.81866142Geographic Spread UnevenThis time, the geographic spread of infections is uneven so far and therefore the impact on business too is limited to certain regions. “We have to request malls as business is severely dented in Maharashtra, Karnataka and Gujarat,” said the CEO of a global retail group. “Some markets are doing fine, but wherever it is challenging we have to ask the malls for help.”However, some shopping centres are hardening their stance saying that they have already extended enough support to their tenants and are currently unable to take it any further as they themselves have to service huge debts to banks. Some mall owners are saying they will watch the situation for longer.“It is too premature to talk about this. We have to see how it pans out in the next couple of weeks,” said Mukesh Kumar, CEO of Infiniti Malls, which runs two shopping centres in Mumbai. These two malls have seen their footfalls drop by 20-25% in in the last two weeks. “We understand if there is a lockdown, if malls continue to operate only until 8 PM for a longer time, then we have to see how to support retailers,” Kumar said.

from Economic Times https://ift.tt/3fxbqcT