Retail leader calls for 30pc rent cut amid Hong Kong sales slump

A retail industry leader has called on landlords and shopping malls to ax rents by at least 30 percent so as to alleviate merchants’ financial burdens as she forecasts the rather fatigued sales volume will stay for quite some time. 

The remarks were made by the Hong Kong Retail Management Association chairwoman Annie Tse Yau On-yee during a radio program on Wednesday, who pointed out that rent still takes up a major portion of the retailer’s operation costs. 

The cost of labor has also exceeded the affordability of retailers given how many shops are understaffed with salaries standing at higher levels. 

“Landlords and shopping malls have relevant data and understand the situation the retail industry is currently facing. The most common help that they offer is to freeze the rents, decrease the rents when extending the contract, or provide certain exemptions,” Tse said. 

“The problem is that even if the rents are decreased, the range still cannot follow the speed of the decline of our businesses. Therefore, I think the rents should be cut by at least 30 percent.” 

On Tuesday, the Statistics Department announced that Hong Kong’s retail sales in May dropped 11.5 percent year-on-year to HK$30.5 billion, missing market estimates. 

The sales value of automobiles and auto parts decreased by 29.8 percent compared to the same period last year, while jewelry, watches and luxury gifts fell by 21.4 percent, and store goods declined by 21.1 percent. 

Retail sales in May continued to decline significantly, primarily due to changes in consumer behavior and the strong Hong Kong dollar exchange rate, the government spokesperson said. 

Tse also said on Wednesday that citizens traveling up north and spending in the Greater Bay Area is an irresistible trend. 

She continued that Hong Kong should recognize its own advantages to lure mainlanders to come and spend in the SAR. She also expects residents from the bay area to treat Hong Kong as part of the “one-hour living circle”.