What does the future hold for book retailers in HK?
Singapore-based bookstore chain Popular announced last week the closure of all its 16 Hong Kong stores, downing shutters after operating in the city for over four decades.
While the shutdown came against the backdrop of a retail sales slump amid the coronavirus outbreak, the fact is that bookstores have been struggling for a long time in Hong Kong, like in many places around the world.
In Hong Kong, exorbitant shop rents made book retailing particularly challenging.
With regard to Popular, we've had news that the publisher and book retailer was sued for some HK$470,000 outstanding rent in relation to its Whampoa Garden outlet.
For this store, Popular had to pay a monthly rent of HK$183,000 plus a 4.5 percent on top of revenue. If we assume each book is sold at HK$100 and bookstore has a profit margin of 20 percent, the branch has to sell 9,600 books each month to cover the rent alone, not to mention other costs such as salary expenses.
Currently, only Chinese-backed bookstore chains – Joint Publishing, Commercial Press, and Chung Hwa Book Company, and Taiwan’s Eslite, are able to afford the rent in big shopping malls in Hong Kong.
The former group has strong financial support from Beijing. As for Taiwan-based Eslite, it has successfully transformed the traditional bookshop model by offering food, drinks and other lifestyle products to generate additional income streams.
Compared to these rivals, the layout and book selection of Popular bookstores are less attractive and the group does not have deep pockets. The shutdown, therefore, is not surprising.
Considering the costs and volume of business, the book retailing landscape in Hong Kong will probably evolve into three major segments - big retailers, online vendors and niche bookstores.
The big retailer group will be composed of the three China-backed bookstore chains and Eslite. The boutique stores will compete by choosing cheaper locations and providing niche collections.
This article appeared in the Hong Kong Economic Journal on March 20
Translation by Julie Zhu
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