Occupancy of a mall is critical not only to the shopping mall owners/developers but also to the retailers for a profitable business. A mall with a decent occupancy is a safe bet for any retailer.
Couple of weeks leading to the re-opening of mall post lockdown, necessitated by COVID-19, there were question marks on the occupancy of the malls, as the discussion between developers and retailers over rental waivers seemed to have hit a dead end. However, wisdom prevailed and both sides eventually understood each other’s perspective and many malls opened with an occupancy as high as 80%, which was quite promising, given the fact the multiplexes, FECs are still shut and food courts only partially open. In addition to the occupancy, the higher conversion ratios were really encouraging. Certain categories like electronics, cosmetics etc started doing great sales from day one itself.
In post-COVID re-opening of shopping malls, developers along with retail partners have not disappointed the customers when it comes to occupancy of the mall, within the giving limitations set in by the rules and regulations laid by various government agencies. The occupancy of the malls will only increase from here on with the re-opening of multiplex, entertainment zones etc.
However, what is hurting the retailers and the developers more are issues beyond their control. Some of them are as follows:
Complete Lockdown: Yes, there are still many states/cities in India which are waiting for a nod from the competent authorities to re-open the mall.
Partial Lockdown: Even in states where permission has been granted for re-opening, malls can’t be open for all the seven days of the week. They are forced to shut on weekends, which ironically are the days when malls receive better footfalls and do better business.
Re-Lockdown: We now have cities, which have decided to impose re-lockdown, completely or partially impacting the business continuity and leading to uncertainty amongst all stakeholders.
Sudden Lockdown: In some unfortunate cases, malls have been forced to shut down as they have fallen in containment zones due to raising cases in their neighbourhoods.
Night Curfew: The restrictions on the timings, till when a mall can be open, has hit the F&B retailers very hard. Bulk of the business for fine-dining restaurants used to come from dine-in dinners. However, due to night curfew they have to shut down their stores much before customers would walk in for a sumptuous dinner.
Banon Serving Liquor: This has been a double whammy for the F&B retailers. Ban on liquor further reduces the reasons for customers to visit the restaurants and the malls.
Restrictionson Multiplex, FECand Gaming Areas: Other than the multiplexes, the Family Entertainment Centres and Gaming areas have also not been allowed to re-open, diluting the idea of a shopping mall, which serves as a one stop destination for a family for all its needs.
The above reasons have impacted the mall business negatively, and the uncertainty caused by it could impact the occupancy levels in the mall.
These restrictions not only impact the retailers and developers but also plays on the psyche of customers, who doesn’t find merit in visiting a mall, when so many offerings are amiss which they were used to earlier. This is notwithstanding the fact that malls provide more safe environments than local markets or high streets for shopping.
However, if these restrictions are relaxed / removed by the governments in-charge, it will go a long way in further boosting the occupancy levels of the mall, thus making the business for both retailers and mall developers profitable.
The competent authorities need to allow malls to function in a way that customers are used to, to ensure business continuity. Having said that, all the necessary precautions and protocols to control the spread of the virus have to be followed religiously.
It’s finding the right balance between businesses and the well-being of its citizens.
About the author:
Mall Mechanic® & Managing Director, Beyond Squarefeet Advisory - A Mall Advisory and Mall Management Company