SynopsisTop five listed lifestyle retailers and quick service restaurants – Aditya Birla Fashion and Retail, Shoppers Stop, Trent, Burger King, and Westlife Development – saved more than ₹2,700 crore mostly in operational costs last fiscal after negotiating with landlords and restructuring employee costs.
Top five listed lifestyle retailers and quick service restaurants – Aditya Birla Fashion and Retail, Shoppers Stop, Trent, Burger King, and Westlife Development – saved more than ₹2,700 crore mostly in operational costs last fiscal after negotiating with landlords and restructuring employee costs.
These five and other big retailers and restaurant chains, which had to keep most of their outlets shut in the first quarter of FY21, had successfully bargained for subsidised lease agreements, including complete rental waiver in the first few months in some cases, with their landlords and shopping malls last fiscal, citing low footfalls and restricted operations, industry executives said.
Most retailers had agreed for no further rent concessions after March this year and most malls planned to revert to the original terms of agreements with tenants after-sales recovered nearly 80% in the quarter ended March. But they are back on the bargaining table as many states have reimposed lockdowns and movement restrictions amid a destructive second wave of Covid-19.
Top retailers confirmed they are in dialogue again with landlords for rebate on rentals.
“As far as rentals are concerned, which is a large part of our cost, we had a good experience working with developer partners. And I think those conversations will happen again this year and they will be fair this year, and we hope to get good savings this year too,” Ashish Dikshit, managing director of Aditya Birla Fashion, said in a recent earnings call.
Burger King chief financial officer Sumit Zaveri said at an earnings call: “With the help of our development team, we have been kind of talking to the landlords, and got substantial relief in rentals.”
High real estate costs in India make it important for retailers and restaurateurs to generate higher average price realisations per square foot of space to maintain profitability.
Malls and high street stores have been shut for a month in most states, impacting bottom lines of shop owners as well as mall operators.
However, despite being among the worst affected by the pandemic-induced lockdowns, many mall operators had given full or partial waivers to retailers last fiscal. They had to bear fixed costs with hardly any income from rentals. Most mall operators and retailers are confident about amicable rental negotiations. “We are in talks with retailers and will offer some rebate this time as well,” said Arjun Gehlot, director of Ambience Malls that operates malls in Gurgaon and South Delhi. “The terms will be finalised once we analyse the full impact of the recent lockdown. We will have to keep a balance to ensure retailers are not impacted much and we are also able to pay our dues.”
According to Retailers Association of India, the retail market in the country shrunk 49% in the last two years due to the extended store closures.
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