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    Covid impact: Retailers threaten to exit malls

    Synopsis

    The move, which comes against the backdrop of the Centre allowing malls to reopen, is expected to help retailers — from Future Group and Arvind Brands to Lenskart and Bata — tide over nine to 12 months of less-thanusual footfalls.

    1ANI
    Due to the coronavirus outbreak, malls are expected to see a lower footfall than before, a recent study by McKinsey India showed.
    (This story originally appeared in on Jun 01, 2020)
    BENGALURU/MUMBAI: The battle between mall owners in India and their tenants, retailers across 350 brands, is set to take an ugly turn, with most threatening to shutter outlets in these shopping centres if their demands for rent-waivers and new rental agreements are not met.


    The move, which comes against the backdrop of the Centre allowing malls to reopen, is expected to help retailers — from Future Group and Arvind Brands to Lenskart and Bata — tide over nine to 12 months of less-thanusual footfalls.

    “We cannot survive without collaboration,” Rakesh Biyani, MD of Future Retail told TOI. “If not, there will be further job losses in the sector.”



    A CEO of a large global apparel brand said retailers have requested several mall owners, for instance, to adopt a revenue-sharing model for three months, followed by a combination of revenue-sharing and minimum guarantee for the subsequent period of six months. “Some of the big ones with deep pockets will sustain without cashflow but what about the small ones,” he said.

    TOI has seen a copy of the ultimatum being sent to malls such as DLF, Ambience, Nexus, Pacific, Phoenix Group, Oberoi and Mantri.

    This comes after several instances of retailers requesting mall owners to re-draw rentals, keeping in mind Covid-19’s impact on the business. Since the lockdown started on March 25, these stores have been shut. Through industry associations, retailers and mall owners have been requesting the government to allow shopping malls to restart operations.

    “...in the absence of the above-mentioned arrangement, it will be unviable and impossible for any of us to resume operations in your mall,” the letter sent out on Friday said.

    “We can’t open until we have a clear deal. This is an ultimatum of a sort. So far, only Forum Mall in Bengaluru has given some rent relief. Most large malls have remained non-committal,” said one of the steering committee members of this group that has penned the communication to these malls.

    Due to the coronavirus outbreak, malls are expected to see a lower footfall than before as consumers would want to avoid crowds, and move further towards online platforms, a recent study by McKinsey India showed. This is making retailers anxious about the near-term sales from these outlets in malls. Fashion and apparel sales are being projected to be most-hit among non-essential purchases.

    “Retailers and brands have to additionally deal with massive accumulation of inventories, unprecedented disruption in manufacturing and supply chain, and the huge shift of customers to e-commerce, among other things,” the letter said, explaining what retailers see as a “humongous task” going forward.



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