Fashion retailer H&M announced that due to increased store rent in Hong Kong, it will close its 2,800-square-meter flagship store in the business area of Hong Kong in the coming months.
The store reportedly opened in 2007 when customers lined up in the morning waiting for its opening every day during its early operation. After the closure of the H&M store, Zara, a competitor of H&M in the fast fashion sector, will become the new tenant of the site.
Cher Chui, a spokesperson at H&M, reportedly told local media that they did not ultimately reach an agreement with the landlord. Meanwhile, Zara will pay USD1.4 million each month for the site in the future, which is twice as that currently paid by H&M. Commenting on H&M's decision to close the Hong Kong flagship store, Cher Chui said the retail industry in Hong Kong develops fast and it continues to expand. Therefore, there are always stores closing and and reopening in other places. She pointed out that employees in the flagship store will be transferred to H&M's other stores in Hong Kong.
H&M now has 12 stores in Hong Kong and 80 stores in mainland China. The company launched its first store on Chinese mainland in 2007 and it now has presence in over 30 Chinese cities.
According to the commercial real estate consulting company CBRE, over recent years, the retail store rent in Hong Kong has been the highest around the world. Since 2011, the rent has increased by 19% to USD3,864 per square feet per year.