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Last Updated : Aug 07, 2020 05:38 PM IST | Source: Moneycontrol.com

COVID-19 SOP: Malls need to shell out Rs 30 lakh a month to meet sanitation guidelines, says Phoenix Mills' Rajendra Kalkar

The Phoenix Mills has concluded rental negotiation agreements with almost 90 percent of retailers and brands.

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Mall owners have definitely heaved a sigh of relief with the Maharashtra government allowing malls to reopen after more than four and a half months.

The government has allowed malls to open only when Standard Operating Procedures (SOPs) are followed. For this, mall developers or owners have to shell out a big chunk from their coffers to meet the SOPs.

The Phoenix Mills Ltd which runs three malls in Maharashtra including two in Mumbai and one in Pune will now have to incur Rs 20-30 lakh as operational cost every month for meeting the guidelines laid out by Shopping Centres Association of India (SCAI) and the government.

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In a freewheeling chat with Moneycontrol, Rajendra Kalkar, President-West and Whole Time Director, Phoenix Mills Ltd, said, “The capital expenditure has gone up to 70-80 lakh while the operational cost is about 20-30 lakh per month.”

To stave off the ill-effects of the pandemic and reassure customers, retailers and shopping centre developers have gone the extra mile to re-align their strategies to meet the new normal and gain customer confidence.

The mall has put in place a slew of entry protocols for customers, such as UV (ultraviolet) scanner for disinfecting handbags and thermal scanners at entrances, sanitisation mats at mall entry points for sanitising footwear, and pedal sanitiser stands at all touchpoints.

The mall also ensures a unidirectional movement of customers (entry and exit) with the help of floor markers and signage -- in common areas, and contactless billing in retail stores. There are floor markers across the mall to ensure social distancing of 1.5 metres.

There are also pre-sanitised shopping bags, trolleys and baskets available to shoppers at all stores.

“The mall management has provisioned for contactless digital payment methods at all touchpoints at stores, parking, F&B stores, and food courts. We have ensured all measures to ensure the safety of customers in a safe shopping zone. We also have a UV Box for disinfecting shopping bags after shopping,” Rajendra Kalkar, President West, The Phoenix Mills, told Moneycontrol.

Usage of alternate urinals and washbasins, and sensor-based taps and soap dispensers are some of the other measures being adopted. Only a certain number of customers, based on the size of individual retail stores, are allowed inside.

Footfalls

Kalkar is of the view that most of the malls that in other parts of the country opened in June such as Lucknow and Bareilly have so far witnessed robust footfalls and performance.

“In these places, customer confidence in the malls have gone up, businesses have also picked up. Although, it will take time to come to pre-COVID levels,” said Kalkar, adding that in other malls footfalls have touched 50-60 percent pre-COVID levels.

Kalkar hopes that in Maharashtra too, footfalls will come back to 50 percent in the next 2-3 weeks.

Rental negotiations

In terms of rental agreement, The Phoenix Mills has concluded rental negotiation agreements with almost 90 percent of retailers and brands, Kalkar said.

When asked if a revenue-sharing model has been adopted with retailers, Kalkar said, “We have been able to arrive at mutually acceptable terms. It is not one bill fits all. So depending on the ability of the group, the financial ability and viability of the retailer, the deal has been concluded.”

He also said some rent waivers have also been given on a case-by-case basis.

Phoenix Malls has a tie-up with more than 1700 retailers and brands across all the malls.

According to Kalkar, a one-size-fits-all approach may not work as agreements with every tenant is different and therefore, there is a need for a mix of partial waiver, waiver of minimum guarantee, renegotiated rates and revenue-sharing arrangements with tenants to mitigate business loss for both the retailers and the malls.

Many retail tenants have restructured deals on revenue-sharing arrangements with mall owners to mitigate risks arising from a decline in footfalls due to COVID-19.

As per a report from ICRA, broadly the mall operators are agreeing to let go of the rents anywhere between 50 percent and 100 percent during the lockdown period and the quantum depends on the balance sheet strength of the mall operator, the competitive advantage of the property and the bargaining power of the retailer.

New Malls?

When the lockdown was lifted, Phoenix Mills launched a new mall in Lucknow and are further looking to expand the portfolio.

On the question of whether the company will be looking at any distressed property during these unprecedented times, Kalkar was quick to add that there was an exciting opportunity to expand the portfolio. "Depending on what comes our way. We are open to it. There is no concrete deal as of now on the table but it if comes we will definitely take the plunge," he said.

Revenue of mall operators is set to halve this fiscal because of the COVID-19 pandemic-driven lockdown, according to CRISIL’s analysis of the top 10 malls.
First Published on Aug 7, 2020 05:36 pm
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