Watsons closes shop in Tsim Sha Tsui after 20 years in latest sign of Hong Kong retail sector’s struggle to survive coronavirus pandemic
- The personal health care chain is shutting its store in one of Hong Kong’s major shopping destinations citing the sharp drop in international visitors
- Retailers that rely heavily on mainland Chinese and other tourists for sales found themselves struggling after the city essentially closed its borders early last year
Watsons paid more than HK$1.5 million a month for the 4,200 square-foot space, according to sources.
“Now the landlord has cut the asking rent by 46 per cent to HK$800,000 a month as it offers the space on the market,” said one source, who did not wish to be identified.
International brands such as Gap, Topshop, Victoria’s Secret and Esprit have either reduced the number of stores they operate or exited Hong Kong altogether.
Retailers that rely heavily on mainland Chinese and other tourists for sales in Hong Kong have found themselves unable to sustain business operations after the city essentially closed its borders early last year to combat and contain its coronavirus outbreak.
Visitor arrivals dropped by about 98.5 per cent in the first eight months to 53,226, from 3.54 million during the same period of 2020, according data from the Hong Kong Tourism Board.
“At present, the retail leasing market is dominated by local food and drink operators who are looking for 2,000 square feet with monthly rental of about HK$150,000 to HK$200,000,” said Helen Mak, senior director and head of retail services at Knight Frank.
Retailers’ expansion plans are still firmly on hold while former tourist districts remain no-go areas. “Most brands continue to value the security of malls and are reluctant to return to the high street,” said Simon Smith, senior director of research and consultancy at Savills, in its Hong Kong retail leasing report for October.
“In the short-run, the second instalment of the government’s consumption voucher scheme which was disbursed on October 1 will further boost local consumption and benefit the suburban retail market.
“Core areas including Tsim Sha Tsui, Mong Kok and Causeway Bay will continue to suffer until borders reopen.”
Leasing activity in core locations remains largely subdued except in Central which continues to benefit from its reliance on high-end local demand, according to the report.
Watsons said it has been reviewing its business operation and efficiency during the pandemic and adjusting the distribution of its stores in different districts, especially in tourist area.
“This alignment is to meet our customers’ needs on health, wellness and beauty by providing them with a reliable and personalised O+O (Offline plus Online) customer experience,” said Watsons.
