VietNamNet Bridge - The closing of a series of Parkson trade centers in Hanoi indicates that luxury shopping malls are facing pressure from the economic crisis.

Parkson has announced that it will relocate Parkson Viet Tower in Hanoi after eight years of operation on December 15, but it has not disclosed the location.

Parkson has also shut down two centers in Hanoi and HCM City because of unsatisfactory business results.

Parkson in Vietnam met with misfortune from 2011 to 2015. It reported a loss of VND37 billion in 2014 and VND1.25 trillion in 2015. 

Meanwhile, its Q3 unaudited financial report (fiscal year begins in July and finishes in June) shows an unsatisfactory business quarter. Parkson’s trade centers in Vietnam had taken a pretax loss of 4.9 million Singapore dollars, or VND80 billion after the first nine months of the 2016 fiscal year.
 

The closing of a series of Parkson trade centers in Hanoi indicates that luxury shopping malls are facing pressure from the economic crisis.

Parkson Hanoi said since its opening day in 2011, it has not fulfilled its business plan, while the stalls there also incur big losses.

Meanwhile, Parkson is in the second position in Retail Asia’s ranking of retail premises area with 160,300 square meters, while it ranks eighth in revenue with $133 million.

This means that every square meter of retail premises brings $832 a year, or $70 a month, much lower than other retailers and a bit higher than the average premises rent. 

However, analysts said that not only Parkson but some other luxury goods distribution chains have also see  unsatisfactory business results. Grand Plaza and Hang Da Galleria in Hanoi, for example, have been poorly patronized, while Trang Tien Plaza, which is located on a ‘golden land plot’ in the central area of Hanoi, had to halt its operation twice.

Many reasons were cited to explain the lack of success of the trade centers, including an unreasonable operation model and conflict between landlords and tenants. However, the common problem the chains are facing is a lack of tenants and low sales.

As for Parkson, analysts believe that the public’s belt-fastening was the reason behind the closure of a series of shops. The stiff competition among big manufacturers and distributors, and the e-commerce boom, also contributed to lower sales.

On e-commerce websites, branded goods are offered at lower prices with good post-sale services. Toh Peng Koon, Parkson’s CEO, admitted that Vietnam had been the toughest market for the group.