Huaihai: Changing for a new world of shopping
Once the most popular shopping street in Shanghai, Huaihai Road is undergoing major changes brought on by new retail strategies by stores and new demands from consumers.
“I have never seen so many final sale posters,’’ said Zheng Shuqi, a 56-year-old resident of the street. “This used to be one of the most popular destinations in the heart of Shanghai. This is such a prestigious location, why would they withdraw?”
More than 20 stores have left the 1,000-meter-stretch between South Chongqing Road and Sinan Road, including wedding gown showrooms, watch retailers, homeappliance hypermarkets, and fast-fashion stores.
While some blame rocketing rents for the vacancies, many analysts and market insiders say money isn’t the major concern for store tenants.
According to data from real estate agents Savills China, the average daily store rent at Huaihai Road is between 35 and 65 yuan ($5.61-$10.43) per square meter. Compared to that of East Nanjing Road and Xujiahui, two retailer hubs in Shanghai, the rent at Huaihai Road is lower.
About 7 percent of the stores on the street are vacant. The average vacancy rate for high streets in all of Shanghai is between 5 and 6 percent, according to data from RET, a commercial property company.
“For Huaihai Road, the withdrawal of tenants reflects the structural transformation of the retail environment for the high street, and it is in dire need to transform to meet current demands,” said Zhen Shiqi, director of retail services, DTZ China.
One reason for tenants leaving the stretch of Huaihai Road is its distance from public transportation. It’s about a 10-minute walk from public transportation to reach the stores.
The section used to include the Japanese shopping mall Isetan, the Barbie Doll flagship store, and electronic home appliance retailer MediaMart, alongside jewelry and watch retailers.
The stores moved and relocated to other streets for various reasons, including low sales revenue caused by online shopping and changes in their retail strategies.
Wu Hesheng, head of Shanghai Huaihai Commercial (Group) Co Ltd, which leases many stores at Huaihai Road, said that tenants moving in and out of the street is a cycle that every high street experiences.
“Stores come and go in line with their strategies. Some move to online sales, some move to suburban areas and some move away to shun nearbrush competitions,” said Wu.
Some brands are interested in moving in, but they may move after the core tenants do, said Wu.
“Now the middle section of Huaihai Road needs new brands and stores that serve as magnets to shoppers,” said Zhen.
Some stores remain popular among local residents. Elderly shoppers still line up at Guangmingcun, a food store that sells local snacks and famous dishes such as fresh pork mooncake; People need to elbow their way into a sales event at silk and clothing stores. And in the cold of winter, consumers get up early to get into the herbal medicine stores.
“You can tell who are missing from the middle part of street — the young consumers who have massive purchasing power and are willing to spend on whatever they love,” said Zhen, pointing out that the middle part of the Huaihai Road needs to enhance its charm for those shoppers.
The street needs to improve its public traffic access and parking, said Zhang Xiaolu, a 26-year-old consumer who complained that it’s too diffi to find a parking lot at Huaihai Road.
“The time when people would walk for a long time to get to a store has passed. Now we take subways or drive when we want to go shopping. If there is too much trouble to get to a shopping area, we’d rather buy online,” said Zhang.
District officials said the empty-store period will not last beyond the end of this year, as authorities and developers have been developing new models for the high street, including pop-up stores, spaces that can be leased by tenants for as short as three months.
“Retailers can make full use of the three-month period to showcase their products and services as a way to promote to consumers, unlike previous contract terms that had to be at least three years’ long. The new model is more flexible and will attract consumers who are curious about new brands,” said Yuan Geping, deputy head of Shanghai Huaihai Commercial (Group) Co Ltd.
Dining facilities will also take up a larger part of the downtown high street. A new shopping mall that is replacing the Isetan shopping mall will devote half its space to dining, according to Cui Zhengyu, spokesman of the new project called Yangguang Xinye.
“It’s quite clear that Huaihai Road is not competing with other streets. It is competing with other commercial models, such as e-commerce and suburban community commercial hubs, and we have taken measures to attract consumers and stores alike back to the street,” said Zhang Jie, head of Huangpu district commercial committee, the authorities who watch over development of the street.
Free WiFi and more convenient parking services will be provided to the public at Huaihai Road by August, he said.
Shanghai’s Huaihai Road is undergoing major changes brought on by new retail strategies and consumer demands.