Luxury shops another sector that suffers consequences of the pandemic, according to report

January 22, 2021 3 min read

The economic situation generated by the COVID-19 pandemic has caused many companies to suffer great losses of both monetary and human capital. The main affected have been restaurants and tourism. However, there is another industry that unfortunately is not far behind.

According to the 2020 Real Estate Report of Lamundi, a real estate platform that is part of the global group EMPG, in the main commercial corridors of Mexico City (CDMX) such as Masaryk, in the Miguel Hidalgo mayor’s office, in December the closure of 32 businesses in luxury including boutiques, wedding dress stores and jewelry stores.

According to the data of the report, speaking of the participation that each subsector has in the total demand for real estate in Mexico, it was observed that the demand, at the digital level, of the commercial subsector decreased -34 percent.

Industry experts have observed a trend for some luxury brands to close their stores located in Polanco, while in the commercial corridor of the Historic Center they still remain.

“Luxury stores have been the most affected because they are not essential goods and you can even make purchases over the Internet, which is a business model that accelerated its growth due to the pandemic; and it has been announced that the avenues that are recognized for their commercial offer, in the last decade, such as Masaryk, in Polanco, Madero in the Historic Center, Altavista or Santa Fe, are currently facing a high level of unemployment and in some cases, reductions in rents of between 15 and 20 percent ”, says Daniel Narváez, Marketing VP of Lamudi.

The real estate company explains that during the second quarter of the year, months in which the health emergency began, the closure of at least 2,500 stores within shopping centers was estimated. Only in CDMX it was reported that from April to September 335 stores closed within shopping malls.

Department Store Reopening

In this context, the department stores asked the government of Mexico City and the State of Mexico to be part of the controlled reopening, since the economic conditions of the sector “have reached a point of no return.”

According to the National Association of Self-service and Department Stores (ANTAD), this would imply “that thousands of workers lose their jobs, affecting the livelihood of their families.”

According to ANTAD, 83,956 people are without work and their jobs are at risk due to the closure of 3,675 stores.

So far, Claudia Sheinbaum, head of government of the CDMX, only commented that on Thursday, January 21, a meeting would be held with department stores to “find the best way to put health as a priority and avoid losing more jobs in the city”.