The number of mask retailers mushroomed as the pandemic slashed commercial rents in Hong Kong. Even as fashionable designs buoy mask sales, the stores consider ways to stay afloat after the pandemic.
Wearing a scented, pink-flower patterned mask to match her outfit for an interview with the author, Grace Liu said trendy masks bring her instant joy in a biting pandemic.
Wearing masks became very much a way of life for people around the world after COVID-19 struck. Thanks to the adaptive and creative businesses, the tough days of people scrambling for masks and visors to protect themselves in the early stages of the outbreak are gone. Mask producers have been quick to capitalize on the growing appetite of fashion-conscious consumers who crave masks that stand out, and aren’t for just putting on, feeding the social-distancing trend and cultivating a vigorous industry.
“Early last year, only drug stores were selling masks from Japan and South Korea, but now, they can be bought at big supermarket chains like Wellcome and ParknShop. Now I can even get elegant ones almost everywhere,” said Liu, who works for a local public relations and consultancy firm.
Experts said the industry’s maturity and people getting tired of putting on stale or surgical masks have fueled the fashion mania even when it comes to covering up their faces. When COVID-19 reared its head, people panicked and were merely concerned with protecting themselves from the virus as mask stocks ran out. But as supplies returned to normal, consumers got bored with the bog-standard pieces of cloth. Their expectations of facial masks have also evolved from the basic function of filtering out the bacteria to a more holistic need in terms of design, fashion and comfort. This has pushed mask manufacturers to diversify their products by embellishing them to meet the demand.
“People can get some fun out of it,” said Gilly Wong Fung-han, CEO of the Consumer Council, Hong Kong’s consumer welfare watchdog. “It’s now all about the quality, design and comfort masks can offer.”
Good Mask — a Hong Kong mask producer that began operations in January last year as the pandemic unleashed its fury — is seen to be making the grade. It has so far opened 16 brick-and-mortar stores in the city both in the urban and suburban areas. The company’s 16 production lines operate round-the-clock at its factory in Tai Po Industrial Village, producing up to 700,000 masks daily. The products include surgical and fashionable masks, as well as crossover brands, with the latter two categories accounting for 20 percent of total production, said Ryan Lee Bing-fung, the company’s founder and chief executive.
The retailer has stores in such prime retail spots as Causeway Bay and Central, and wants to build up its own brand, he said. “Basically, all our retail outlets break even and some are even making a profit. But even in a worst-case scenario with these two (Causeway Bay and Central) shops failing to make money, we’ll still keep them as they can greatly promote our brand.”
Commercial rents decrease
The expansion in a flagging economy has been partly driven by lower commercial rents.
“For the time being, the rentals for these two shops aren’t too high,” said Lee, adding that landlords have been forced to lower rents amid the pandemic-battered economy. All of Good Mask’s stores are rented on a short-term basis — from four to nine months. According to Lee, current commercial rents have slumped by 60 to 70 percent compared with those before the pandemic. “When the economy is good, landlords seldom offer short-term leases.”
Among the world’s costliest retail locations, Causeway Bay and Tsim Sha Tsui are natural habitats for posh brands and tantalizing tourists with deep pockets, especially from the Chinese mainland. But as COVID-19 keeps inbound tourists at bay, Hong Kong’s high-end retailers have borne the brunt, with the total value of sales of jewelry, watches and valuable gifts plunging by 54 percent year-on-year in 2020, official figures from the Census and Statistics Department show.
As sluggish consumption persists, luxury brands have called it a day at the city’s key retail strips. Louis Vuitton, Prada and Valentino have put up the shutters on Canton Road in Tsim Sha Tsui, while luxury watch labels Rolex and Omega and skincare brand Kiehl’s quit Russell Street in Causeway Bay. Reeling from soaring vacancy rates, high street rentals fell by 28 percent year-on-year in 2020, following a 21 percent drop in 2019, said a report from Colliers International.
Reflecting the dire situation, a three-floor shop of about 8,000 square feet (743 square meters) on Lockhart Road, Causeway Bay, was leased in February by a Chinese restaurant for HK$450,000 (US$57,931) a month — half of the landlord’s original asking price of HK$880,000.
Colliers expects landlords to revise their retail portfolio strategies to be more flexible, while offering more incentives to keep up occupancy. “Landlords are now more willing to accept short-term leases, subdivided units, pop-up stores, and enhanced customer loyalty programs,” said Cynthia Ng, senior director of retail services at Colliers. She sees retail rentals staying flat this year.
While the pandemic has hit the retail sector hard, it has led to a bigger variety of shops in the city’s premium retail districts. “Property developers will offer tenants lower rents to fill the gap created by luxury brands either relocating or downsizing,” said Jeff Yau, a property analyst at DBS Bank Hong Kong.
While supermarkets saw sales grow by nearly 10 percent last year compared with 2019, the overall value of retail sales slipped by 24.3 percent, according to the Census and Statistics Department. Like Good Mask, active retailers, including Don Don Donki, have expanded their footprint in Central.
As local spending continues to drive consumption, neighborhood malls are showing resilience. “Some high streets still see renewed demand from tenants in the new concept food-and-beverage, supermarket, home-living and fitness-related trades,” said Colliers International, noting that food-and-beverage retailers are leveraging currently affordable rents to expand.
Mask stores see opportunities
“They (mask stores) are taking the opportunity right now. But it may not be sustainable,” warned Wong from the Consumer Council. “If the economy picks up again and tourists start coming back, I believe these stores may not be able to pay for the high rents if they fail to transform themselves well,” she said. “It also depends on the rents to be offered in future, and whether facial mask shops can diversify to make themselves well-rounded.”
Wong said she believes the watershed for the face mask industry will come when the government lifts the mandatory mask policy. “If the government lifts the mask-wearing rule, it would most likely mean that Hong Kong would have been free of COVID-19 infections for a certain period, or many people would have been vaccinated against the virus. So it would be safe enough to stop wearing masks,” she said. “That would have a downside effect on the mask business”.
But Lee said people will continue to put on masks as they’ve been used to it for so long. They’ll still be health-conscious and continue to wear masks until at least the end of this year or early 2022 despite the mass vaccination program.
Wong said Hong Kong people are beginning to live with wearing masks to stay healthy, following the trend in East Asia, including Japan and South Korea, where it’s common for people to wear masks to fight diseases and air pollution. “People have now acquired a better sense of infectious diseases,” she said, adding that such a trend is likely to continue.
However, the pandemic’s impact will not linger on forever, said Wong. She suggested wise businesspeople to start thinking about how to transform their operations. They should diversify and turn to lifestyle stores selling hygiene products. “People will be more conscious about picking up the right products for personal or household hygiene. So if mask suppliers are able to evolve and transform themselves fully to meet the market trend, their business will survive. But probably, it will not be stores selling just face masks,” she said.
Lee said he’s prepared for any change on the horizon. “We’ve laid out plans as early as December. Besides masks, we also sell high-end foods, such as steak from the United States and wagyu beef from Japan.” He plans to transform the business into online grocery shopping and delivery services. Under the “GdMeal” channel on Good Mask’s mobile app, shoppers can glance through a variety of foods ranging from Australian lobsters to Ningxia gouqi and place orders online before having them delivered to their doorstep.
However, Lee said he won’t walk away from the mask business entirely. “Even after the pandemic is gone and people stop wearing facial masks, I think there’ll still be strong demand for masks in places like hospitals and clinics. I’ll still maintain a certain level of production and encourage other employees to explore new businesses.”
Despite her love for fashionable masks, Liu hopes the pandemic will soon be history.
“It’ll be the time I can have my make-up again when I see clients. With a mask on, it doesn’t make sense having make-up.”
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HONG KONG NEWS