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Merchants run away from shopping malls to stop loss
A lot of merchants in Hanoi have shut down their kiosks and transferred the stalls at shopping malls to others because the business is not good enough to pay for retail premises rents. The shopping malls in HCM City are also deserted despite the sharp rent galls.
Hoa, a petty merchant in Ba Dinh district in Hanoi in early 2011 leased a kiosk at Grand Plaza on Tran Duy Hung Street to run a clothes shop. The rent was over $2,000 a month. Hoa incurred the loss of VND100 million just after four months of doing business because of the low sales.
Hoa decided to give the retail premises back to stop loss, even though the owner of the shopping mall offered some free leasing months, because she believed she would incur bigger loss if she continued the business here.
Since the occupancy rate is too low, the management unit of the shopping mall six months ago decided to increase the service fee by one million dong per square meters. However, later, it decided to shut down the mall for the restructuring.
An officer of IDJ A, the manager of Grand Plaza, said it’s now still unclear when the shopping mall would open again.
The Hang Da shopping mall, which is located in a very advantageous position – the central area of Hanoi, has also closed down for the upgrading. The shopping mall now only receives visitors to the first floors, while the upper floors are now under the re-construction with many stalls closed. Some sign boards are hung over there, saying that the owners are seeking someone to transfer the stalls
Huong, the owner of a groceries kiosk here said she has decided to stop business here. The retail premises rent alone costs her VND15 million a month. Besides, she also has to pay fees for other services, marketing, totaling VND20 million.
Meanwhile, the business has been going very badly, which has made her incur the loss over the last five months. “I have decided to stop business and I have bargained away some products to other merchants, who still try to hold out. I still do not know what I am going to do in the time to come,” she said.
The same situation can be seen at Mipec Tower on Tay Son Street, Parkson at Keangnam Landmark on Pham Hung Road. The third floor of Mipec Tower remains nearly empty. The owner of an ice cream shop at Micpec Tower said he is going to transfer the shop.
The merchant said that the business of ice cream depends on the number of visitors to the shopping mall. Since there are too few customers, he cannot stay there for any longer.
Parkson at Keangnam Landmark still opens to receive visitors, but the stalls there are quiet with very few guests. Most of the clothes stalls there offer the 10-50 percent sale off, but this still cannot attract buyers.
A merchant here said that he still can hold out and maintain the stall because of the policy which calculates the premises rents based on the turnover.
According to CBRE, a real estate service provider, the biggest barrier that hinders the business development at the shopping malls is the high taxes merchants have to pay, which make up to 50 percent of the products’ value.