Retail rents and sales mostly still rising in China
Rapid growth of internet shopping may affect Chinese retail sector, but for many store operators, rents and sales are still rising
With consumer markets in Europe and the United States still suffering from the effects of the financial crisis of 2008, China had been the main beacon of hope for retailers looking for a boost to lacklustre sales elsewhere.
In stark contrast to the prevailing gloom in the West, macroeconomic indicators have mostly painted a positive picture in China, and retailers have responded with ambitious roll-out programmes.
However, recently retail sales in China have shown signs of slowing and in the hypermarket sector, for example, retailer Home Depot intends to close its big-box stores in China and Tesco is cutting four of its underperforming stores.
The malaise has even spread to the luxury sector, with Hugo Boss recently reporting a slowdown in sales and Burberry announcing 10 weeks of flat sales in the third quarter of this year.
However, other retailers like Hermes and Prada are still recording strong growth.
So the question is whether the problems are inherent to individual companies in a specific trade or whether there is widespread cooling throughout the retail market?