Covid-19 resurgence: Retailers seek rental concessions as businesses get affected again

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April 5, 2021 5:30 AM

As local authorities in many parts of the country are imposing fresh restrictions to tackle a renewed surge in coronavirus infections, upsetting business recovery, retailers are back to the negotiating table with mall-owners and high-street landlords, seeking an extension of concession on rental payments.

Retailers, already seeing a significant dip in business, are hoping landlords to be discerning and accommodate their requests. Representative Image

As local authorities in many parts of the country are imposing fresh restrictions to tackle a renewed surge in coronavirus infections, upsetting business recovery, retailers are back to the negotiating table with mall-owners and high-street landlords, seeking an extension of concession on rental payments.

Malls, many of which had supported brands with full rental waivers during the lockdown period last year and reasonable discounts on rents after unlock are, however, somewhat reluctant to offer further relaxations. “We do not have any capacity left in us to offer any waiver from April. Earlier, lockdown was very tough but our payouts were fixed. It created a big dent in our pockets,” says Gurvineet Singh, CEO at Mumbai-based Viviana Mall. The company that operates in Thane was allowed resumption of services only in September.

Singh’s reasoning is that business which was merely half of pre-Covid levels in the first month after opening touched nearly 80% of pre-Covid levels in February. The increase in business, the CEO says, was not driven by more footfalls but due to a rise in average spend per person. “Losses incurred last financial year have to be covered in the first quarter,” Singh said.

Most of the adjusted deals struck after lockdown expired last month. Inorbit Malls, Nexus Malls and R City Mall did not respond to queries.

Retailers, already seeing a significant dip in business, are hoping landlords to be discerning and accommodate their requests. “The situation is only getting worse. Landlords will have to step in soon or else there will again be a conflict,” says Siddharth Bindra, MD at Biba. For the ethnic-wear brand, business has declined by over 60% in Maharashtra alone, one of the worst-hit states. Bindra says it will be impossible for retailers to pay actual rents in badly affected states and landlords there will have to provide support for at least six months. In areas less impacted by Covid-19, landlords may have to extend relief by a quarter or so. “Initially, we expected business to get back to normal by April. But now, we estimate it to take another four-five months,” says Bindra. Biba that started negotiations as early as March has been able to persuade few high-street landlords to grant rental concessions for another quarter.

FabAlley & Indya that is projecting footfalls to reduce by at least 30% in the coming days, especially in the affected areas, says a rebate on rentals is undoubtedly required for the next three months. “We have gone back to the malls and high-street owners and suggested them to either get into revenue share agreements or deduct rental charges. In the West, we have sought the highest rental discounts,” says co-founder Shivani Poddar who is convinced that brands “cannot survive” without support. Poddar says the understanding is that the vaccination programme is expected to cover a large part of the population by July and the ensuing festive months should bring in decent sales numbers. Retailers should be able to start paying regular rents in the later half of the year.

Infiniti Mall, which operates two properties in Malad and Andheri, will assess the situation for a couple of weeks more before taking a decision on extending rental rebates. CEO Mukesh Kumar says the company is open to supporting retailers if things further deteriorate. But “it is premature to talk about it now”, says Kumar who offered concessions to all brands in the August-October period last year. Footfalls that had reached nearly 75% of pre-Covid levels are now back to 40%.

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