Retail in Asia

In Markets

Hong Kong Retailers experience same issues and ask landlords to face realities of the current Covid 19 outbreak

A large number of retailers are clearly facing the same challenges and fearing for the future of their businesses in Hong Kong.

Their request is the same across different categories : Only % turnover rental should be charged by the landlords during this new crisis.

SEE ALSO : Updates on Covid-19 : a global economic crisis

Coming off the back of seven months of retail down turn due to the protests, during which retail tenants were given little support from landlords, today’s retail business is showing drops of 70-90% compared to the same period last year.

Whilst retailers worry about the long term continuity of their business, their short term concern will be the protection of their livelihoods and those of their employees. Some of these businesses have been in Hong Kong for many generations, and employ up to 800 people.

Ashley Micklewright, President & CEO, Bluebell Group commented: “The last thing we want to do is to shut down something that took a few decades for our shareholders and three generations to build, let alone lay off our employees. However, the last 7 months of losses is becoming unbearable for many of us. The impact on the business and traffic is far worse than anything we have ever experienced.”

Many landlord groups in Macau and China have been quick and very responsive, some giving rent free months. However this is not the case in Hong Kong. Although many landlords in the city were praised last week for their ‘social responsibility’, the reality of the situation is far from that portrayed.

Landlords in Hong Kong are still asking to see sales numbers and passing on only small short-term concessions on base rent. As a result many brands are starting to close stores or leave Hong Kong and the occupancy rate in many malls is dangerously going down at the same speed.

“As a business owner, our main concern is to protect our team. We are truly hoping that we can find a proper solution (and not a short term patch) to get us out of this situation. If not, a large number of the SMEs will no longer be on the market very soon and large groups will consequently reduce their exposure to Hong Kong. Hence, Hong Kong is about to become another city with ghost malls which is in no one’s interest. We really are looking forward to working with our business partners to find a viable solution as this is the only possible outcome.” Alan Zagury, Co-founder of the Madame Fashion Group added.

Another brand’s representative said: “during the past 7 months of social unrest most of Hong Kong landlords did not give any help to retailers. Chinese landlords after less than one week, while still on holiday, already came forward offering different solutions. It is time  Hong Kong landlords adjust their rental requests to reality.” He added: “it is also ironic to ask retailers to stay open when many office staff don’t go to office “.

It is already well known that many retailers have reached out to landlords, in the past two weeks, but the responses from the landlords are again slow and far from what is needed to stay in business, let alone justify keeping their staff employed. In frustration many retailers will have no choice but to temporarily close up to 200 stores across the city, impacting many of the city’s malls.

SEE ALSO : Hong Kong protests leave malls empty and… the landlords?

Whilst this action of temporary store closures sends a clear message, a cry for help, the retailers are looking for the landlords to merely face the reality and, ideally, charge rent on turnover only and thereby waving base rent completely, at least until the city goes back to its normal state of business, schools and the border are reopened.

Other media monitoring the situation includes SCMP.

*Bluebell is the owner of Retail in Asia