Nike Shanghai Nanjing Road closed sports brand profits but run rent

Nike's Shanghai Nanjing Road store is about to close, which means that Nike will have only one Nike store owned by the World Trade Union Store in Shanghai.

At present, the Nike store on Nanjing West Road in Shanghai is still in operation. The five-storey store now has only one to two floors open, and other floors have been closed. With the availability of new lease agreements for shops, Nanjing Road closed its doors.

Yesterday (February 9th), a clerk at the store confirmed to the reporter that the store was about to close, but the exact date was not clear. The reporter learned from Nike that due to the property side, the store was forced to close.

Unreliable rent

Nanjing Road shopping district is constantly upgrading. Yi Jianxiong analyst Xue Jianxiong pointed out: "With the development of economy, the consumption characteristics of the Nanjing Road shopping district are changing, and there is currently a tendency to shift towards high-end luxury goods. With the long-standing Nanjing Road shopping district already positioned in recent days, Years of continuous upgrading, elimination of old-name shopping malls, the introduction of international brands is accelerating, the cost of traditional consumer brands to pay is also increasing year by year.

Nike's closing shop is under this background. The property of the shop on the 1-5th floor of No. 993 Nanjing West Road where the Nike store is located is the Jiubai Group. This store was previously leased by Shengyang (Shanghai) Trading Co., Ltd. (hereinafter referred to as Shengyang Company) to Jiubai Group in 2008. Sublet to Nike. In this area, Shengyang Company will sublease shops to various sports brands.

However, with the approaching of the lease time, the rent in the shopping district is also rising. According to an industry source, Shengyang company chose to withdraw because the rental increase of shops in the lot exceeded the expectations of Shengyang company.

This statement is more consistent with Nike's response to the "Daily Economic News" reporter. Yesterday, a person in charge of the Nike Public Relations Department told reporters that "Shengyang Company prematurely terminated its lease agreement with a store located at Nike Shanghai, 993 Nanjing West Road. The store was leased by Shengyang Company and subsequently subleased with Nike. Due to the adjustment of the operating strategy of Shengyang Company, its management team decided to terminate the leasing agreement with the owner in advance for the entire 993 building on Nanjing West Road."

But whether it will open another store in Shanghai, the official said there is no news from the company level.

The increase in profits lost to rental increases?

With the repositioning of a number of mature business districts in Shanghai, the price of business districts has steadily increased.

“In this context, the well-known rental growth of the Nanjing Road commercial circle is even more alarming.” Ma Gang, an independent commentator in the shoe and apparel industry, pointed out that for the sports brand industry, the rate of increase of profits has not kept pace with the increase in rents. pace of.

This also means that whether there is sufficient renting capacity will determine whether it can continue to survive in Nanjing Road business district. Compared with jewellery retail products, the current growth rate of the shoe and clothing industry is not eye-catching.

According to the latest statistics from Shenzhen, the sales of gold and silver jewellery increased by 52.1% over the holiday season, the food and beverage alcoholic drinks increased by 21.5%, the clothing, shoes and hats knitted category increased by 18.2%, the daily necessities increased by 20.3%, and cultural and office supplies and communications. Equipment sales were up by 45.9% and 28.4% respectively.

The growth rate of shoes and apparels only stayed at around 20%. Ma Gang pointed out that “As the business district continues to upgrade, it seems that it is more suitable for the jewelry industry to settle in, and its renting capacity is much higher than that of the sportswear industry.”

According to the latest research report published by Knight Frank, rents for shops in Beijing and Shanghai will increase by about 15% this year. In the fourth quarter of last year, Shanghai's retail market continued to show a booming supply and demand situation. More and more overseas merchants entered the Shanghai market in the fourth quarter, driving the rapid growth of Shanghai's high-end retail market. For example, the US casual wear brand Hollister Hollister opened its first store in the Raffles City, the flagship store of the Greek accessory brand Folli Follie and the Italian fashion brand ASOBIO, all opened on Nanjing Road West.

“To make profit in the Nanjing Road business district is getting more and more difficult.” The industry insiders pointed out that most local brands regard the Nanjing Road business district’s losses as advertising expenses, and more emphasis on their propaganda role. "But now the upgrading of commercial areas, these brands have been unable to withstand these commercial costs, should consider timely and more cost-effective business district."