Consumers in China are watching coronavirus numbers closely as they wait patiently for a tipping point to arrive with the warm weather. The outbreak has had a heavy impact on the retail market because the majority of Chinese citizens remain under quarantine. Shopping malls either postponed or shortened their operating times, and landlords have slashed retail rents as the virus spread across China and beyond.
Galleries Lafayette Beijing already halted operations on February 4th, and the Hang Lung Property group’s Plaza 66 announced a half-rent reduction for tenants in mainland locations for three weeks, beginning on January 25. Harbour City shopping center, a benchmark for luxury sales in Hong Kong, lowered its February rents by half.
A journalist from the Chinese newspaper China Times visited many popular business districts after the virus hit — including Wang Fujing, Joy City, and SKP in Beijing — and exposed the dire nature of the country’s retail scene. For example, SKP, which saw daily sales reach $157 million (1 billion yuan) 3 months ago, now hardly has any foot traffic. The mall has adjusted operating times to open from 11:00 to 18:00, and while “the in-store traffic is less than the same time last year, we still saw customers coming in,” says one sales associate from Cartier. “We had quite a few clients shopping in-store for Valentine’s Day.” One shopper coming out of the LV store says she felt safe, as there’s less of a crowd, “There’s also temperature screening equipment by the entrance, and sales associates were taking extensive safety measures,” she says. SKP adopted a commission model with its tenants, so the virus situation has affected both the mall and its stores.