Shanghai’s historic shopping and finance district, The Bund, is undergoing a transformation as fast fashion brands and restaurants replace luxury brands in the area.
Due to less visitor traffic, slowing sales, and new shopping options elsewhere in the city, luxury brands are leaving The Bund.
Since the year 2000, The Bund was popular with western luxury brands looking to open their first stores in China. With its historic architecture, the shopping center matched the look of the luxury brands’ stores at home. In 2003, Armani became the first foreign luxury brand to open on The Bund, and brands such as Cartier and Ermenegildo Zegna followed soon after, according to Want China Times.
The area quickly became a luxury shopping destination for tourists, but the stores found that they were attracting more visitors than buyers.
One reason for the slow sales and traffic is the lack of a luxury design strategy for the area due to the large number of landlords. The central section of Huaihai Road, the main drag of The Bund, is operated by Yongye Group, Shanghai Huaihai Commercial, and Shanghai Yiming Commercial Group. The southern section is operated mainly by individual landlords.
Moreover, many properties are managed by state-owned businesses, which rented retail space to brands that weren’t appropriate for the area. In fact, some luxury brands have hesitated to open stores on The Bund due to neighboring stores that don’t fit the luxury image.
As rents decline from their peak last year of 60-70 yuan (US$9-11) per square meter to 50 yuan(US$8), and first-floor rents declining 5 to 10 percent to 30-35 yuan, the empty spaces of The Bund are beginning to fill up.
Fast fashion brands, such as H&M, Zara, and Uniqlo, and Western-style restaurants and cafes are leading the rejuvenation of the area. The fast fashion brands attract a wider range of shoppers and can afford the higher rents with their high inventory turnover.
Restaurants that have opened on The Bund include Lao Da Chang Restaurant, which was founded in 1937 in Shanghai and recently reopened in the area, as well as Harbin Bakery, which sells Russian-style cakes. Restaurants and food stores will account for over half of the space in the Yangguang Xinye Shopping Mall, which will open at the end of the year.
image credit: canduela