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Mall reopening permission fail to cheer up owners

With central government allowing the reopening of malls (with certain restrictions) from June 8th onwards, mall operators and retailers are readying themselves to get back to business after a gap of nearly three months. As the busy summer season is almost drawing to a close and COVID-19 threat still in the air, it may not be a smooth sailing for the retailers. Retailers and mall owners in general anticipate normalcy to return only by next summer season.

Though the central government has permitted for the mall reopening, retailers can pull up their shutters only if the respective state governments say so. As per Anarock Capital, there are 159 operational Grade A malls in India’s tier I cities with Mumbai Metropolitan Region (35 malls), Bengaluru (29 malls), New Delhi (17 malls) and Pune/Hyderabad/Gurugram/Chennai (13 malls each) having the major share of malls. While Karnataka and Uttar Pradesh governments have already indicated their willingness to allow the opening of the malls, cities of Mumbai, Pune, Chennai and Gurugram unlikely to see openings in June 2020 because of persistence of COVID-19 problem.

Apart from deciding on the issue of reopening of malls, another contextual issue is that of rentals. Retailers are not anticipating any major pick up in business soon and want to revisit the issue of rent at least till the business improves. During pre-COVID period, rental costs for retailers (including facility management and common area maintenance) accounted for 15-25% of store consumption/revenue. So, retailers want major concession on rental front to stay in business and the mall owners cannot say absolute no to these requests as their business mostly runs on relationship basis. Most of the retailers are pushing for a formula based on revenue sharing which under the present circumstances may find favour wit the mall owners too. Meanwhile, some of the mall owners have given full rent concession for retailers during the lockdown period when malls were closed, some have reduced it by half while in some other cases negotiation is still going on.

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