With COVID-19 cases on the decline and the masses getting vaccinated, malls are recording higher percentage revenue as business rebounds to almost pre-pandemic levels. Malls across the country had to close due to the government and state-imposed lockdowns to stem the spread of coronavirus.
According to a survey by the Retailers Association of India (RAI), September retail sales stood at 96% of what it was during the same month in 2019, up from 88% in August. Siddharath Bindra, Managing Director, Biba, said his business bounced back to 90% of pre-pandemic levels in September and expects it to recover fully in October with heightened spending before Diwali. “We signed those higher revenue-sharing agreements with malls on an annual basis,” he said. “Most of the brands have agreed to share 1-2% higher revenue share to malls and even we have. It is a kind of mutual risk sharing.”
Abhishek Bansal of Pacific Malls said when the company had given rental waivers, they had asked them for 1-2% higher revenue share to kind of balance their losses. Pacific Malls, which operates three malls in Delhi, are seeing sales back to normal. Rajendra Kalkar, president, west, Phoenix Malls, said they are hopeful that retailers will be able to share higher revenues. “Various categories of retailers have differing slabs of revenue sharing with shopping centres – from 3-5% for electronics chains to 15-20% for apparel and restaurants. So, the higher percentage of revenue sharing would be anywhere from 2-5%.”
Dhruv Bogra, country manager, Forever New, said most of the malls offered a 50% rebate on rentals from March last year onward but they had got undertakings from brands to share higher revenue when business returned to normal. “Most brands agreed to a higher percentage of revenue sharing because that decreased the impact of lower revenue and paying a higher rent during those difficult months,” he explained. “Most of the brands have agreed to share 1-2% higher revenue share to malls and even we have. It is a kind of mutual risk sharing.”
There are dozens of retailers such as Madura Fashion, which is home to brands like Louis Philippe, Van Heusen, Allen Solly and Peter England; Domino’s Pizza; Forever New; and Arvind Fashions – which sells labels like Sephora, Calvin Klein and Tommy Hilfiger have either started sharing higher revenue or will do so in the coming months.
It should be noted that many malls in India had given rental concessions to retailers and restaurants to cushion them through the lockdown and lean months.