Shops find more not necessarily better

PUBLISHED : Wednesday, 28 September, 2011, 12:00am
UPDATED : Wednesday, 28 September, 2011, 12:00am


The streets of Mong Kok, the most densely populated district in Hong Kong, teem with shoppers. But for retailers in the area, translating the heavy pedestrian traffic into profits can be a challenge.

'Of course there are thousands of potential shoppers walking on the streets. But there are also many shops, and how to attract buyers into your shop can be a problem,' said Edgar Yung, owner of Colour@life, which sells trendy groceries from South Korea and Japan.

Yung opened a 1,000 square foot shop on the seventh floor of an old building in Mong Kok's Nathan Road two years ago, but recently quit the busy district to rent a shop in the far less busy area of San Po Kong.

'In Mong Kok, I had to distribute many advertising flyers on the streets every day, hoping that potential shoppers would be attracted to my shop,' he said. 'It was hard work and very time-consuming.'

As a result, when his lease was close to expiring and his landlord asked for a rent increase of about 20 per cent, Yung decided to move to a smaller shop at Mikiki, a 210,000 sq ft mall in Sun Hung Kai Properties' Latitude project in San Po Kong, near the old airport. He is paying the same rent he was paying in Mong Kok.

'The shopping mall is not located in a prime district. But there has been an increase in the number of visitors coming into my shop. Visitor flow is also more stable, with office ladies calling during their lunch hour and housewives coming in during the afternoons,' he said.

The repeat business from a stable customer base meant he was able to stock selected products to fit customers' needs. 'In Mong Kok, I could never predict who would come into the shop,' he said.

Property consultants said shops above the ground floor in prime districts did not suit all retailers. 'If a retailer wants to open a shop upstairs in a prime district such as Mong Kok, the positioning of the product must be clear - like a hair or beauty salon,' said Helen Mak, of Colliers International. 'A trendy grocery store is likely to target impulse buyers and would be better suited to a location in a shopping mall, which provides a better area to display products.'

The general manager at Sun Hung Kai Properties' leasing department, Fiona Chung, said that even though Mikiki (experience in Japanese) was not in a prime location, it had a wide catchment of about 800,000 shoppers. 'We want to draw retail tenants with special concepts, creating a special characteristic for the mall.'

Property consultant Knight Frank said prime shops in non-core retail districts were sought after, given the limited supply and high rents of shops in core areas. 'While international brands have been competing for shops in Hong Kong's prime locations by paying high rents, other retailers have been forced to move to more affordable spaces in non-core areas,' Knight Frank said in a report.

British entertainment retail chain HMV, for example, had relocated its Tsim Sha Shui and Causeway Bay shops to the fringe areas of the districts and closed its Central store. 'We expect this trend of relocation and decentralisation to continue and push up non-core retail rents by another 2 to 3 per cent over the rest of 2011,' Knight Frank said.