The coronavirus has had a catastrophic effect on retailers worldwide, and Hong Kong – known as a shopping mecca with its many upscale shopping malls and outlet stores – is no exception.
The Hong Kong Retail Management Association said on Thursday (April 16) that about one-quarter of retail stores may close before year’s end.
“The retail sector is in a very rigorous stage of depression,” said the retail association’s Chairwoman Annie Yau Tse. “You will see that, when you walk past every four stores, one will be closed,” she told Reuters.
The retail association said that about 17,200 stores are expected to close this year if there is no change to the current situation. That’s about a quarter of Hong Kong’s retail stores.
Retailers in the U.S. are similarly facing staggering drops in business. Surveys conducted by PYMNTS have found that 58 percent of small to medium-sized Main Street retailers say they may not survive the pandemic.
The chairwoman pointed to rent reduction as the only way to keep ailing retailers from shutting down for good.
“Manpower is not our biggest cost; our biggest cost is rent,” she said. “Without appropriate rent reduction from landlords, it may waste the effort and the relief measures from the government.”
According to the association’s retail surveys, Hong Kong’s retail sales fell by a record 44 percent in February from a year earlier. COVID-19 travel restrictions and fears have kept both tourists and residents of the Asian financial hub away from shopping areas.
The association is calling on landlords to slash rent by 75 percent for at least six months — or allow retailers to pay just a portion of their rent, based on sales, for that same period of time.
Approximately 37 percent of respondents believe they can stay in business for up to four months. Seventy-two percent of survey respondents have gotten some type of rent reduction.