Indian retailers urge landlords to adopt revenue-sharing rent model
In this article (5)
High-profile Indian retailers are lobbying mall owners to transition to a revenue-sharing rent model in the wake of the coronavirus pandemic.
Times of India reports that the companies, including Future Group, Aditya Birla, Arvind, Raymond and Litebite Foods, believe moving to a revenue-share model from fixed or minimum guaranteed rentals is critical to the survival of the industry. The retailers are seeking for the revenue model to be calculated from March 1.
A letter to mall owners signed by around 75 retails firms operating 200 brands proposed a flat revenue share percentage based on tenant categories. The letter suggests regular brands could contribute 10–12 percent of takings, including common area maintenance, while fast-food brands could contribute 7–8 percent.
“Our objective is to ensure that all businesses in the retail industry are able to survive this pandemic and its aftermath and thereby sustain 6 million jobs that this industry generates,” read the letter. “For that it is critical that mall owners and tenants (brands and retailers) are able to arrive at a mutually agreeable arrangement on rentals, not only for the period of the shutdown but also thereafter till normalcy returns.”
The report suggests large mall owners remain undecided on the issue of whether rent waivers or revenue sharing models are the more appropriate response to the impact on the business of the coronavirus pandemic.
Questions & Answers
Q.Which specific companies are campaigning for a revenue-sharing rent model in India?
Which specific companies are campaigning for a revenue-sharing rent model in India?
High-profile retailers including Future Group, Aditya Birla, Arvind, Raymond, and Litebite Foods are among those lobbying mall owners. They believe this change is crucial for the industry's survival during and after the pandemic.
Q.When do retailers propose the new revenue-sharing model should begin?
When do retailers propose the new revenue-sharing model should begin?
Retailers are requesting the revenue-sharing model be calculated starting from March 1. They are seeking an arrangement for the shutdown period and until normal trading conditions return to the market.
Q.What percentage of their takings are retailers suggesting they contribute under the proposed new model?
What percentage of their takings are retailers suggesting they contribute under the proposed new model?
The letter suggests regular brands could contribute 10-12 percent of their takings, which would include common area maintenance. Fast-food brands might contribute a lower figure of 7-8 percent.
Q.How have major mall owners reacted to the proposals for new rent models?
How have major mall owners reacted to the proposals for new rent models?
Large mall owners reportedly remain undecided regarding the best course of action. They are weighing up whether rent waivers or a revenue-sharing model would be the more appropriate response to the pandemic's business impact.
Reader pulse
Should malls adopt revenue-sharing rent?
23,293 votes so far