As market slows down, myriad retailers request their owners to adopt a revenue-sharing model.
The lockdown is impacting retail business tremendously. Retailers are swinging between sustaining in the market and supporting their employees. To subside the ill-effect of lockdown, retailers are suggesting a shift to revenue sharing model to mall owners.
Big names like Aditya Birla Group, Future Group, Litebite food, etc. collectively appealed to the mall owners to shift to a flat revenue-sharing pact from the current fixed-rent model. They consider the model crucial for the next 9 months in order for them to stay afloat. Retail is among the worst-hit sectors by the pandemic. It has left many retailers empty-handed. They have additionally asked for government support like moratorium of loans and wage distribution.
“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.
Around 75 retailers that are in charge of 200 brands came together to make this appeal to the owners. They suggested that the revenue should be shared including the “common area maintenance” charges. In pursuit of that, they conducted an internal survey for the same. As per the result, the percentage should be 10% for vanilla brands, 7-8% for large formats and food chains, and 3-8% for supermarkets.
At present only a handful of mall owners have collaborated with the tenants to share their load. Prestige, which owns UB City, Forum, etc, has given a complete rental waiver till the upliftment of the lockdown. Another mall owner Brigade, which owns Orion Mall has given a 50% waive off on rent for the lockdown period.
While some mall owners have started supporting their retail partners, others are yet to give a green signal to the proposed model.
