Staring at huge losses, malls seek to reopen as Mumbai begins unlock

Shop timings extended but formal spaces still shut, say industry players

Some of Mumbai’s top malls are asking for organised shopping spaces to be reopened even as shop timings will be extended in the financial capital in June. As part of “unlock” programme, the Maharashtra government on Sunday extended the timing of essential stores by three hours in districts with low positivity rates. Mumbai is part of this list. Delivery of non-essential items will be permitted from June 1.

But mall owners argue that keeping formal spaces out may not be the right approach to take. “In the first wave of Covid-19, malls reopened later (in Mumbai) even as non-essential retail shops were permitted to resume during the first tranche of relaxations. That should not happen now, since malls are safe places to shop,” said Mukesh Kumar, chief executive officer (CEO), Infiniti Mall.

Kumar, who is the chairman of the Shopping Centres Association of India (SCAI), has made representations to the state, asking for malls to reopen quickly so that normalcy can return to the sector. The body has also asked for a waiver on statutory payments such as property tax, electricity charges and excise fees for a short duration.

“The revenue loss over April-May has been huge for malls during the second wave of Covid-19. The loss in the region is Rs 3,000 crore over the two-month period. We will need support from the state government as well as banks to help us tide over this phase,” Kumar says.

Malls aren’t the only ones asking for relief measures. The Retailers Association of India (RAI) has asked for a relaxation in compliance requirements, interest subvention and a moratorium on principal and interest payments for six months to help tide over the crisis.

Industry estimates suggest that the revenue loss to retailers over April-May is the tune of Rs 25,000 crore. A recent RAI study said retail sales in April declined 49 per cent over pre-Covid levels — April 2019. May is expected to be far worse, since fresh lockdown curbs were implemented across the country as Covid spread.

Malls and retailers are renegotiating rent agreements for FY22 in keeping with these challenges.

Rajneesh Mahajan, CEO, Inorbit Malls, said there was an intent and willingness to sort out issues with retail partners.

“I don’t see as much anxiety as there was last year among retailers and mall owners around rent negotiations. Discussions will be on a case-by-case basis. Mall owners will use a combination of waivers, discounts and revenue-share, depending on the degree of comfort and how negotiations progress,” Mahajan said.

Industry sources said in FY21, retailers were able to draw out around 20-25 per cent of savings on rental costs, thanks to a combination of waivers and discounts.

Discounts varied from 10-50 per cent depending on the property and category of retail. This year, the expectation is that savings on rentals for retailers would hover around 10-15 per cent of their full-year rental costs, since lockdowns have been unequal across the country. Also, high streets in smaller cities continue to operate even though malls have remained closed across most places.