Pop-ups, smaller shops are gaining appeal as Hong Kong retailers seek to lure shoppers and rein in costs

Developers and landlords are likely to allot more space for pop-up stores to diversify their tenant mix and keep foot traffic in their properties

The shift is playing out in the demand for smaller physical spaces for product launches and seasonal changes, Lead8 says

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Pop-up stores and short-term leases are gaining appeal among retailers distressed by viral outbreak and dwindling tourist arrivals. Photo: Felix Wong

Published: 2:00pm, 3 Mar 2020Updated: 7:51pm, 3 Mar 2020

Distressed retailers in Hong Kong are likely to adopt pop-up spaces and short-term leases as a strategy to rein in costs in an industry battling to overcome the impact of anti-government protests and coronavirus outbreak, analysts said.

Developers and landlords are also likely to allot more space for pop-up stores to diversify their tenant mix and keep foot traffic in their properties even as businesses compete for a smaller pool of tourists and retail spending in the city.

“We foresee smaller spaces and short-term leases gaining popularity as it allows for greater flexibility and is more efficient from a retailer’s perspective,” said Lawrence Wan, senior director of advisory and transaction services in retail at CBRE.

Pop-up stores are temporary retail spaces and are often themed with an event or current market trend. They are typically short-term leases at a fraction of the standard rent, which allow vendors to capture a surge in traffic at festive times like Christmas or Lunar New Year.

The strategy is gaining appeal as retailers face the latest threat from the viral outbreak after struggling through much of 2019 under the clouds of US-China trade war and anti-government protests. Daily visitor arrivals in Hong Kong slumped to 3,000 in February, compared with 100,000 in January and 200,000 in 2019, crippling the retail and hotel sectors.

Demand for smaller spaces has gained momentum as retailers sought to trim rentals from landlords to little avail, prompting an unprecedented strike in several malls last month. While mall owners have offered some concessions, some business operators argued they did not go far enough to enable them to beat the drop over the long haul.