This could be termed a climbdown of sorts by tenants in malls across the country. After some of them like the multiplexes said they would want complete waiver of any rent from the mall owners and developers for the shutdown period, some of the other retailers have suggested a revenue sharing formula, as per a report in the Economic Times. These are 175 large format retailers like the Future Group that runs the Big Bazaar outlets, Aditya Birla Fashion, Levi’s and Domino’s Pizza and so on. This coalition of retailers has made what it calls an “appeal” to the landlords on this.
They would want this to run at least till the end of this calendar year 2020, before reverting back to the fixed rental formula. The retailers believe this is one possible way they can hope to survive. The retailers are also seeking from the government a moratorium of one year for repayment of loans they have availed. They want concessional electricity as well as a waiver of property taxes. The last two can only be decided by the respective state governments and local bodies.
The first reaction from the mall-owners has been that they would rather wait and watch to assess the full impact of the lockdown. It may now be a little early to get the complete picture. To be fair to them, it is still uncertain if the lockdown will be lifted or extended and if extended for how long. Even if the general lockdown is lifted, it is not certain if the malls will be allowed to be opened since these are high risk areas with hundreds of people congregating and no social distancing norms possible.
The mall owners themselves are looking for concessions from the government and are looking at any way out of the situation through the insurance policies they have taken. It may be recalled that the malls were shut even before the lockdown was announced.
The retailers have done their own calculations and survey and feel if the revenue sharing formula is accepted, it would mean an expenditure of 10% to 12% for the standalone brand retail outlets; it will be 7% to 8% for the large format fashion stores and food joints, while the supermarkets may have to shell out between 3% and 4%. They have formed an internal group to discuss these proposals with the mall owners.
The fear of the pandemic means that even when the malls are allowed to open for business, it is not certain how many people will initially feel bold enough to risk visiting the malls.