Fighting obsolescence with innovation
The grim possibility of the Philippines going the way of the United States, where once bustling giant malls have become derelict, empty shells of the bustling commercial centers they once were, is remote in the eyes of Steven T. Tan, senior vice president of SM Supermalls handling operations for mall properties in the Philippines and China.
For Tan, the depressing scenes of malls practically becoming haunted spaces will not replay in the Philippines because malls in the country, particularly those with the ubiquitous initials for what was once Shoemart founded by Henry Sy Sr. in 1958, have not stopped innovating, always changing their character and offerings to meet the changing needs of their customers.
Innovation, claims Tan, is the main reason behind SM’s continuing success, expanding within a generation from a small shoe store in downtown Manila into a chain of 61 malls in the Philippines and seven malls in China, and still counting.
But despite its stranglehold on the local retail sector, Tan says the appetite is still there to expand even further, thus the constant search for brands and concepts that will cater to new types of customers in the Philippines, including the millennials who are considerably more exposed to global trends and more demanding than the generations who came before them.
It also helps that the Philippines, given its annual growth rate of over 6 percent—one of the fastest in the region—has put the country on the radar screens of global retail names. This was not true just 10 years ago, Tan says, when even SM could not get an appointment with the global brands because they deemed the Philippine market too small to warrant their attention.
“Back in 2007, they would not even talk to us. They said they had no plans of expanding to the Philippines. Of course the big bosses would politely meet us but they would tell us that the Philippines was not on their radar. But right now, things have changed. They now say they want to enter the Philippines through us and of course that makes us proud,” says Tan.
“We are right now the sweet spot in Asia. They monitor that also, and of course when they do their research about the Philippines, SM will always pop up as one of the top mall developers in the country,” he adds.
It is also among the most awarded.
SM Supermalls, for example, won the prestigious Brand of the Year Award, National Tier 2016-2017, during the World Branding Awards ceremonies at London’s Kensington Palace. The World Branding Forum is a global, non-profit organization dedicated to advancing branding standards for the good of the branding community as well as consumers.
The group was also named among the top 10 successful Asean enterprises entering China. The award was given by the China-Asean Business Council, a group of leaders and experts working together to create mutually beneficial trade policies and economic developments among China and Asean member-states.
Tan says that in keeping with the spirit of innovation, SM will continue to look at bringing in new brands that will click with Filipinos.
Among the brands in its portfolio are Uniqlo, Forever 21, Crate and Barrel, Sephora and Bata.
“We do not just sit here and wait for things to happen. We go out and seek brands and concepts. We send our people out all the time, see how we can innovate,” says Tan, “However, our core business is still leasing out space. The only time we will come in with a brand is if we feel it will add value to the mall.
Then there’s the matter of merchandise mix. That, too, has evolved over the years.”
Tan says that when he joined the company 13 years ago to handle the operations of The Podium, the food component of the total SM revenue mix was only 5 percent.
Today, that share has surged to around 30 percent as more Filipinos have chosen to make the malls their one-stop-shop and top destination for
get-togethers with friends and family.
“We also tried to make our malls more interactive with a lot of events and services such as church services. What we want is to make the mall your third place. The first place is the home, second place is work, and third is the mall, where you can do everything, from shopping to entertainment to getting your passport and having your tooth fixed,” Tan says.
“Serve the customers well and you will be assured of repeat business,” he adds.
This philosophy was established by founder Henry Sy Sr., the richest man in the Philippines, according to Forbes Magazine.
“The SM brand was established in 1958 and since then it has been a never-ending story of innovation, from Tatang himself. He was the first, for example, to have an airconditioned store in Carriedo. He was also the first to open for business on a Sunday, when all other shops were closed. He also was the first to be open the whole day, and not close for a lunch break. He was our chief disruptor,” says Tan.
For the current management, the mantra is to make sure that SM will not act its age, and instead remain young and agile, to keep up with upstarts and competitors who are just waiting to capture unprotected territory.
“To innovate is in our DNA. The spirit to do so is second nature to us. We want to be true to what we say, that we’ve got it all for you,” concludes Tan.
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