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Retailers ask mall landlords for revenue-sharing model

“It is not even a request – it is an appeal from all tenants to all landlords across the board to collaborate in this unprecedented time to build a partnership to make the retail industry survive,” said Rakesh Biyani, joint MD of Future Group, which operates Big Bazaar and Central department stores.

Last Updated: Apr 08, 2020, 11.21 PM IST
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An open appeal letter is expected to go to the landlords later this week, said Sanjeev Mohanty, MD for South Asia for Levi Strauss, who is part of the group.
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New Delhi: A coalition of more than 175 large modern retailers and restaurant chains including Future Group, Aditya Birla Fashion, Levi’s and Domino’s Pizza plan to jointly “appeal” to their mall and high-street landlords to shift to a revenue-sharing model for the next nine months to help tide over the crippling effect of the coronavirus pandemic.

“It is not even a request – it is an appeal from all tenants to all landlords across the board to collaborate in this unprecedented time to build a partnership to make the retail industry survive,” said Rakesh Biyani, joint MD of Future Group, which operates Big Bazaar and Central department stores.

He said the appeal is the first in a series of steps proposed with mall owners and they include asking the Central government for a one-year moratorium on loans and seeking concessional electricity tariffs and a waiver of property tax for a year from state governments.

Mall owners said it is too early to discuss and gauge the final impact of the coronavirus pandemic as it is still unclear when they would be able to open for business.

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“Today, the situation is very fluid. We will wait for the situation to be better and only then we will know the real picture,” said Rajendra Kalkar, president - west at Phoenix Mills, which operates malls in Mumbai, Pune, Lucknow, Chennai and Bengaluru.

He added that they don’t know how much support the government will give or what insurance benefits they will get, saying a discussion would possible only when they have a clear picture.

Retailing has been among the sectors hardest hit by the Covid-19 outbreak, which had prompted states to shut malls even before India started a three-week nationwide lockdown on March 25.

An internal survey carried out by retailers and restaurants showed that flat revenue-sharing with shopping centres, including common area maintenance charges, would result in an outgo of 10-12% of revenue for standalone brands, 7-8% for food and large format fashion stores and 3-4% for supermarkets, according to a person familiar with the plans.

The retailers plan to form a steering committee that will discuss the proposals with representatives of the malls, the person said.

An open appeal letter is expected to go to the landlords later this week, said Sanjeev Mohanty, MD for South Asia for Levi Strauss, who is part of the group.

“These are unprecedented times. All stakeholders in the retail value chain – retailers, mall owners, small vendors, service providers, industry bodies, governments – must do everything possible to collaborate and lead with empathy to survive this crisis to make sure that the retail sector can protect employment across the board as far as possible,” Mohanty said.

“Even when the malls open, we do not know what the footfall situation will be like,” said Alok Dubey, CEO of Arvind Group’s Lifestyle Brands Division, which manages brands including Gap and US Polo.

Jubilant FoodWorks, the operator of Domino’s Pizza in India, declined to comment, saying it is in a silent period.
(Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)
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