Pricerite closes stores, culls staff to weather downturn
Furniture and housewares retail Pricerite has closed four stores and will cut staff and executive salaries as it rides out the combined impact of the protests and now the coronavirus on sales.
Four stores have been closed, the company said in a statement, without identifying their locations. The leases on another eight stores are due to expire this year and management is evaluating which of these will be renewed.
Store staff numbers have been reduced by 10 per cent, but the company said this has not resulted in any effect on service quality.
Wages of senior management have been cut by 20 per cent and directors’ salaries by 40 per cent, from now until May and June respectively. Logistic employees have been asked to take unpaid vacations.
“Under the current economic downturn, the sales of local consumer goods such as furniture have been under great pressure,” said the chairman of Pricerite’s parent, Cash Group, Guan Baihao.
“The flow of customers has been reduced by 30 per cent in the past nine months under the influence of epidemics and social movements. The new retail model is convenient for customers to enjoy online shopping and delivery services. However, the supply of major furniture and household goods has also been affected by the impact of the epidemic, and the supply chain is almost terminated,” he said in a statement translated from Chinese.
“Under the situation of severely affected supply and demand, if the economic situation does not improve in the short term, the group will be forced to take other measures, including further reduction of branches and layoffs.”
Meanwhile, the company is negotiating with landlords for temporary rent relief.
Baiho said the current series of cost-saving measures have gone far beyond the Sars crisis of 2003.
Along with declining retail sales since the social unrest commenced last June, Buildings Department data shows that only 12,923 private homes were completed in the first 11 months of last year, a decrease of nearly 18 per cent over the previous year and the lowest figures in three years. That in turn impacts on the sale of furniture.
As of December 31, Pricerite had 28 branches across Hong Kong and employed 800 full- and part-time employees.