HONG KONG (Reuters) - The Hong Kong Retail Management Association (HKRMA) said on Thursday that about 25% of retail stores in the Asian financial hub were expected to close by end of the year despite fresh government relief measures against the fallout from the coronavirus pandemic.
Some 2,000 stores are seen closing in the February-April period, with 3,200 shops expected to shut down in May, according to a survey by HKRMA, conducted before the government announced the new relief measures for smaller firms.
Another 6,600 stores are expected to close in the May-August period, while 8,600 are likely to face closure between September and December.
Hong Kong last week announced relief measures worth HK$137.5 billion ($17.7 billion) to help businesses and people stay afloat as the city joins global efforts to cushion the impact of the pandemic.
The Hong Kong Tourism Board said on Wednesday the city’s visitor arrivals plunged 98.6% year-on-year in March.
HKRMA said about 17,200 stores were expected to close in 2020, accounting for one-quarter of the about 62,400 retail stores in Hong Kong, if there was no sign of improvement in the situation.
“We will see that when you walk past every four stores, one will be closed, indicating that the retail sector is in a very rigorous stage of depression,” said HKRMA’s chairwoman, Annie Yau Tse.
“Manpower in not our biggest cost, our biggest cost is rent...Without appropriate rent reduction from landlords, it may waste the effort and the relief measures from the government,” she said.
Hong Kong’s retail sales fell by a record 44% in February from a year earlier, as travel restrictions kept tourists away and residents avoided shopping centres to prevent the spread of the coronavirus.
Some 5,200 retail employees are expected to have lost their jobs in the February-April period and another 5,200 jobs are set to go in May, making up of about 4% of the 260,000 workforce in the retail sector, HKRMA said.
The association urged the city’s landlords to cut rent by 75% for at least 6 months or allow companies to pay a turnover rent, linked to sales, for at least 6 months.
Some 37% of the respondents to the survey expect they can keep operating for up to 4 months, with only 23% saying they can hang on for more than 12 months. Rent reductions have been secured by 72% of the respondents.
The impact of the novel coronavirus on Hong Kong’s tourism sector is unprecedented and the city hopes to start seeing a return to normal by July, in part by trying to develop new markets, the head of the tourism board said.
HKRMA said earlier that it forecast retail sales value for first half of 2020 to fall 30-50% from the previous year, with more stores closure expected.
Reporting by Donny Kwok; Editing by Kirsten Donovan