At midday on a recent weekend in Now Zone shopping mall, located in District 5, even discount signs of up to 50% off fail to attract the attention of passing shoppers.
“There’re slow days on which only one to two items are sold. Our average monthly sales oscillate between VND30 million (US$1,345) and VND45 million (US$2,018), which means a loss, Q., owner of a stall selling famous Korean cosmetics, lamented.
Retailers at Saigon Pearl, a recently opened mall in Binh Thanh District, are not faring any better.
A number of unoccupied spaces stick out across its three first floors, despite the mall’s auspicious location.
|A shop assistant takes a nap during working hours at a deserted Saigon Pearl Plaza stall in Binh Thanh District, Ho Chi Minh City.
The eye-catching jewelry, clothing and sports shops remain unnoticed, even by window shoppers.
Though shops at established malls including Vincom A, Vincom B, Diamond Plaza, Parkson Ly Tu Trong, Parkson Truong Son, and Crescent Mall appear busy, most visitors are cinema goers or diners.
Despite its bustling appearance, investor V.’s mall chain, scattered across District 1, have also languished and contain a large number of unoccupied stalls.
According to investors and stall owners, weak sales at shopping centers has existed since mid 2015, with only a slight improvement recorded before this year’s Tet (Lunar New Year), which fell in early February this year.
The investor of a T. cosmetics chain added that the number of customers has slumped since Tet, including on weekends, though the situation brightened up substantially on Valentine’s Day and International Women’s Day (March 8).
Year on year sales have plunged by 20%-30% against the same period last year.
Shop owners at less luxurious malls have also complained that they maintain their loss-making business mainly to collect debts from their clients.
Cosmetics vendors at Now Zone center bemoaned their monthly revenues vacillating between VND70 million (US$3,097) and VND140 million (US$6,193), or a 10%-20% drop against previous years.
|Three sales clerks idling around at Now Zone mall in District 5.
The quality of products at malls, however, is not always guaranteed.
Apart from righteous shop owners, more than a few others cunningly sell shoddy goods or even copycats at the sme price as foreign brand items, according to investors.
Kha Tu, a long-time supplier of clothing items at shopping malls, revealed that a number of shop owners choose to purchase low-quality goods from local or Chinese producers before labeling them with famous brand names.
Exorbitant prices have also driven customers further away from extravagant shopping centers.
Surveys conducted by Tuoi Tre (Youth) at a number of malls revealed that items displayed at these centers fetch prices 10%-20% higher than those at other places or even more.
Exorbitant leasing fees have also driven retailers to turn their back on luxury malls.
According to the Tuoi Tre surveys, shop owners pay rents of US$20-US$37/m² per month for spaces in inner-city areas, and as low as US$10/m² per month in suburban districts, excluding value-added tax.
Tran Thuy Khanh, sales manager of T. fashion brand, said her company had finally given up on a shop housed inside Vincom mall in District 1 over steep rent and plummeting sales.
|Part of Now Zone mall in District 5, which is empty of customers despite numerous discounts
“We paid US$5,000 for our 80m² shop each month, but the shop earned us less than one-fifth of the sum in turnover,” she explained.
“We persevered for one year before finally succumbing,” Khanh added.
Meanwhile, Tuong Vi, owner of K.N. furniture brand, said that she is considering insisting on lower rents from owners of shopping malls in inner-city areas because of intolerably sluggish sales since Tet.
The brand is currently sold in eight shops nationwide, though even the best selling store at Vincom B Mall in downtown Ho Chi Minh City continues to make a loss.
Nguyen Huu Phung, chair of Viet Fashion Corp., acknowledged that despite heavy losses and costly rents, local retailers try their best to run their shops in malls in a bid to increase their coverage and better promote their brands.
“Meanwhile, it’s not difficult for foreign players who boast abundant capital to rent auspicious locations while waiting for the local economy to spring back to life,” he noted.
Le Hoang Chau, president of the Ho Chi Minh City Real Estate Association (HoREA), asserted that the metropolis, with its population exceeding 10 million, is a haven for shopping malls.
However, residents’ low incomes have stifled their purchasing power, and kept them from consistently shopping at malls.
Despite overwhelming hurdles, many businesses keep on with the shops at the malls for long-term growth.
“Many local and foreign retailers have been racing for the best retailing spaces. Several brands, mostly foreign ones, have dominated the retailing market,” Chau stressed.
Apartment buildings with malls integrated fetch higher prices than their counterparts without these structures.
In recent times, a number of commercial centers have carried out revamps to better tailor the centers to today’s shopping trends.
Large-scale centers offering a wide variety of items and recreational services have taken the lead.
New commercial projects have dedicated major areas to customer magnets including restaurants, cafes, game areas, and electronic showrooms.
Among them is Vincom Mega Mall, situated in District 2, which operates the city’s first ice-skating rink.
Aeon Mall Celadon, in Tan Phu District, has lured young visitors with hi-tech games.