Fashion retailer H&M is to close its Hong Kong flagship store at the end of next year: the monthly rent has become too expensive for the Swedish chain. Painful detail: the next tenant will be H&M's biggest rival, Zara.
New rent: 1.1 million euro... per month
H&M entered the 2,790 square metre store in 2007, but as local rents are going through the roof (rising 20% last year alone!), the store has become unprofitable. The retail market in Hong Kong is under pressure, as customers from mainland China are starting to feel the crisis and are less likely to embark on shopping trips to the former British crown colony.
The Swedes are not the first chain to leave the expensive Central district and move elsewhere in Hong Kong: analysts have spotted a real “trend toward decentralisation”. Apart from its flagship store, H&M already had eleven other stores in Hong Kong.
H&M's major competitor, Zara, apparently feels the crisis somewhat less: the Spanish chain is the new tenant of the building and have accepted to pay a rent of 1.1 million euro per month – almost twice the rent the Swedes pay now.