Retailers seek rent waiver, govt support; malls ask for waiving off electricity charges, government levies

Retailers and brands are seeking rent waivers across malls and high streets with earnings taking a hit due to the coronavirus-induced lockdown.

Offers under consideration of mall management and landlords include total waiver during the lockdown period, partial waiver, renegotiated rates, and revenue sharing arrangements. Some have asked mall managements to waive off the minimum guarantee that is charged from shops during the period of lockdown.

Market sources indicate that eateries including coffee shops, restaurants and pubs, fashion apparel, footwear and anything that comes under discretionary spending have been worst hit due to the prolonged lockdown.

India has been in a lockdown since March 25. In some states and regions, a complete shutdown was in force much before.

Brands like Woodland; Speciality Restaurants, which run the largest chain of restaurants in India; Metro Brands, the footwear retailer which houses brands like Metro Shoes, Mochi, Walkway and DaVinchi, and some multiplexes have either written to malls or have initiated discussions.

Negotiations on

“Yes, we have written to some malls seeking rent waiver or to landlords seeking renegotiation of rents. Discussions are on,” said Harkirat Singh, MD, Aero Club, makers of Woodland branded footwear and apparels.

Singh said that even in the 2008-09 economic crisis, rents were renegotiated. But the current situation is “worse”. “Some of the stores are quite old or have landlords with whom we have a working relationship. So naturally, we expect some resolution towards this end,” he added.

Apparel brand Raymond also confirmed that it was in “active discussion” with mall owners and high street shop owners across the country to arrive at an amicable solution.

Keeping the company “healthy and strong” would be the immediate focus for Metro Brands, which has close to 500 stores across the country, most of them company-owned, company-operated. If rationalisation is required at some stores, the company would take a call accordingly, said Alisha Malik, Vice President, E-commerce, Metro Brands.

“Say, if there is a very fancy store in a prime retail space and the owner is not willing to negotiate, then it will be important to put the company’s financial health first so that when it is time to reboot we are strong enough to do that,” she said.

Anjan Chatterjee, Chairman and Managing Director of Speciality Restaurants, which owns brands like Oh Calcutta, and Mainland China, points out that the restaurant industry has been amongst the worst hit. Revenues are near nil. Costs like rent and staff salary continue to recur.

“We are left with no other option but to seek rent waiver. Business and economic activity have absolutely stopped,” he said, adding that government support was also a need of the hour. Countries like the UK have announced support for businesses with a certain percentage of staff salaries being borne by the government. “I hope the same is done in India too,” he told BusinessLine .

Government support

According to Chatterjee, South City Mall in Kolkata has already reciprocated and said they will take up matters once the lockdown is lifted. “Discussions are on with other malls too,” he said.

The Retailers Association of India (RAI), an industry body of retailers, has also sought “stronger policy and fiscal interventions” in the form of support for wages, moratorium for payment of principal & interest, and support in the form of working capital.

The association has maintained that the retail industry employs about 46 million people, and sustains livelihood of 250 million Indians. Food and essentials contribute around 50 per cent, while other non-essentials contribute the remaining.

“Not opening non-essentials can have a serious impact on 20-25 million employees and 125 million Indians working in non-essential retail and millions of other Indians working in the total supply chain. If retail loses a million jobs, it will have a livelihood impact of at least five to six million,” said BS Nagesh, Chairman of RAI and Founder of Trust for Retailers & Retail Associates of India, in a recent statement.

Malls in a fix

Malls, meanwhile, are in a fix.

A section of mall owners maintain that there are fixed costs which are being borne by them even when the premises are shut for over a month now. In fact, some malls are operating with skeletal staff as grocery stores and supermarkets operate in them.

The Bengal unit of CREDAI has already pointed out that many realtors have high tension connection in their premises. There is no operation / production and the electricity consumption is negligible.

Incidentally, the high tension consumers had to give a minimum demand commitment and the bill is raised on the consumer for minimum demand whether electricity is consumed or not.

Since Covid-19 is a pandemic amounting to force majeure , CREDAI has called for waiver of fixed maximum demand charges and the 17.5 per cent government duty.

CREDAI has requested that the state power department “direct the CESC and various discoms to pass on the waivers to their consumers in the forthcoming electricity bills” for the next three months.

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