JEDDAH: Mall owners have refused to renew the contracts of shops selling readymade garments because they fear they will default on their rental payments because of stiff competition from international brands and the growth of online shopping, said an online media report Monday.
These owners and investors are now moving to shops where they pay less rent along main roads, many of which are unsuitable for their businesses. Others are also planning to do so.
Mohammad Alawi, chairman of the committee on commercial centers at the Jeddah Chamber of Commerce and Industry (JCCI), said this was not an issue about higher rentals. Many investors cannot compete with wholesalers bringing in top brands, who also offer huge discounts on their clothing. The committee would soon meet with some mall owners to discuss the issue, he said.
Badr Jala, in charge of contracts at one mall, said malls try to attract the world’s top brands to make investments in their facilities, based on how many people visit annually. Every year, new terms and conditions are drawn up, which investors can either accept or reject, he said.
He said companies supplying ready-made garments cannot compete with international major brands that often offer 50 percent discounts on their products. In addition, some customers have complained of the poor quality of readymade products made in China, Thailand and India.
Hahim Al-Sharif, a member of the garments committee at the JCCI, said some malls now refusing to renew contracts were established 12 years ago, before the entry of major brands. He said these contracts have not provided any protection to investors and stipulate 20 percent annual increase in rent. These malls make up to SR600,000 a year in rentals, he said.
He said the creation of social media and other communication platforms have resulted in many customers shopping online.
Loan default fears: Malls reluctant to renew garment shops’ contracts
Loan default fears: Malls reluctant to renew garment shops’ contracts
