How are mall owners coping with the current situation?
The current situation can be divided into 2 distinct parts – lockdown and post-lockdown. Malls were temporarily closed for about 2 months. During the closure period, there was no revenue for retailers, resulting in great hardships for both them and us. However, post lifting of lockdown there is some economic traction in terms of consumer spend. We recognize that this traction will take some time to build up and restore itself to the levels that were obtained in the pre COVID-19 era. In the interim, both retailers and mall owners will need effective collaboration to balance out each other’s financial stresses.
Rental income has been hit for mall operators, how do you plan to combat this?
Both parties need to make some compromises to revive the sector. We have been empathetic and shown our pragmatism by waiving off rent during the entire period of the lockdown. While the revenue structure is rent, the cost structure is asset maintenance, utility costs, property tax, EMIs etc. During the lockdown period, these costs were kept to a minimum without impairing the quality of the asset. Post opening, while some costs have been rationalized, others have to be incurred. We can only succeed if there is reciprocation from our tenants.From our side, we have ensured that the malls are kept in pristine condition, in terms of stringently following health and safety protocols.
Realistically, in what time frame do you see this sector reviving?
We foresee the sector reviving by August 2020, with business significantly picking up during the festival season, namely the Dussera / Diwali period. People have been confined to their homes for a long time now. They are waiting to step out and celebrate their freedom by doing things that were a normal part of their daily lives before COVID-19 hit.
How do you overall see the future of malls?
In the not too distant future, brick and mortar retail which is best exemplified by malls, and online retail will begin to converge, and will borrow best practices and business models from each other. Brick and mortar will start using technology as an accelerator for growth. The advantages of data and analytics, which are today the exclusive domain of online retail, will now have to be harvested by brick and mortar retail as well. The mix in mall retail will also change with greater focus on social connect, sustainability and becoming the community platform for the catchments they serve.