Chennai-based shopping mall, Express Avenue, may have figured out a formula to not only ensure that all its tenants reopen their stores post-lockdown, but also don’t bear the scourge of falling demand and consumption at these stores. Its solution: rental payment in line with monthly sales performance.

For example, if the mall’s H&M store has registered only 60 percent of its monthly revenues in September, when compared to September 2019, the store will have to pay only 60 percent of its rent. This model, Express Infrastructure (owners of Express Avenue) says, is applicable to all of the mall’s 220 stores. All stores will, however, have to part with 50 percent of their existing rent irrespective of in-store sales.

‘Revenues determine rent’

“If someone has done just 60 percent sales when compared to last year, they will end up paying 60 percent rentals. If they have done 70 percent, they will pay 70 percent,” says Munish Khanna, Chief Revenue Officer, Express Infrastructure, “The moment they (stores) touch 80 percent of last year, they will start paying us full rental.”

The mall also waived off rent for five months during the nationwide lockdown, which extended for malls in Tamil Nadu, up until August 30. However, the waiver was subject to stores settling the mall’s outstanding Common Area Maintenance (CAM) charges, at the appointed date. “What we said was this: if our partners are supporting us post-lockdown, we are willing to consider their request for rental waivers,” says Munish, “But they had to earn it.”

Part of the “earning” meant that each of the stores benefiting from rental waivers and subsidized rents had to reopen the day the mall reopened. At the time of writing, 210 of 220 stores at Express Avenue have reopened. In contrast, competitors, Phoenix Marketcity Chennai and Palladium, have only managed to reopen 162 of their 315 stores.

‘Stores integrate sales data with mall’

Express Avenue has managed to track revenues at each of its stores through an integrated data network, within the mall.

“All our stores have integrated their sales data with us. So, on a daily basis, we come to know how much business has H&M or Forever 21 done, or Lifestyle, Calvin Klein, Tommy Hilfiger, Underarmor or Adidas for that matter done,” says Munish, “We use these numbers to compare sales this year with those that were registered last year."

This data, Munish says, not only lets Express Avenue determines rentals, but also becomes an interested party in boosting in-store sales at the mall. “We have helped design a model that lets stores boost distance-selling even as some customers have chosen to stay away from stores during the pandemic,” he says.

A massive liquidity crunch endured during the COVID-19 lockdown months has been the retail sector’s biggest concern even amid the reopening phase. Not surprisingly, a number of stores haven’t had the fiscal wherewithal to reopen even after the Centre has revoked lockdown restrictions at several standalone stores, and shopping malls.

The situation has been particularly pronounced at shopping malls, given the hefty rents that brands have paid to occupy prime real estate within these malls. However, certain malls have banked on better business in segments like electronics and athleisure, even as those like formal fashion and beauty have continued to endure a fall in demand.