Gokongwei group to build more community malls

THE GOKONGWEI group is getting into pocket-sized retail development in a bigger way under the community shopping mall format “Robinsons Townville” of retail arm Robinsons Retail Holdings Inc. (RRHI).

RRHI president Robina Gokongwei-Pe said the company would start building at least two of these new community or strip malls with a footprint of 5,000 to 10,000 square meters close to populous neighborhoods each year.

“Because of [heavy] traffic, there are many densely populated communities in the Philippines where they want to buy their grocery, electric fan, electric bulbs closer to home,” Pe told reporters after the company’s stockholders’ meeting last week.

But these community malls were too small for large property developers, even for affiliate Robinsons Land Corp., to focus on, Gokongwei-Pe said.

RRHI so far has built nine of these community malls under the “Robinsons Townville” brand, the newest of which included a retail center in Buhay na Tubig in Cavite and another in Regalado West Fairview.

“The whole idea is to get closer to targeted market and provide them accessibility and convenience and sort of meet their basic shopping needs. The choice of location will be in densely populated areas, which won’t be served by the larger malls,” said Justiniano Gadia, general manager of Robinsons Supermarket.

For every location, about 70 percent of leasable area will be covered by affiliates such as Japanese budget shop Daiso and hardware format HandyMan but anchored by the supermarket.

“The balance of leasable will be farmed out to branded QSR (quick service restaurants) or even a bank, salon or barber shop,” Gadia said.

By getting more aggressively into this community mall concept, the Gokongwei group will address stiffer competition and potential price disruptions in retail space leasing with the rise of similar small retail centers. New property developer DoubleDragon Properties Corp., for instance, is building a chain of 100 community shopping malls under the brand “CityMall” and tycoon Henry Sy-led SM Investments Corp. has acquired a 34-percent stake in CityMall Commercial Centers Inc., the DoubleDragon subsidiary developing the community malls.

Ayala Land Inc. has also started building more strip malls as part of its mixed-use developments and has forged separate partnerships with retailers Tantoco and Puregold groups for such ventures.

For its part, RRHI would be building about 15 to 20 regular supermarkets a year and Robinsons Townville was just like a bigger supermarket with extra space that could be leased out, Gokongwei-Pe said.

Given stiff competition in the retailing space, RRHI’s same-store sales growth guidance for the year is still at a modest 2-3 percent. In terms of net income margin, the company ended last year with 4.9 percent. This margin could be “flattish” or even lower due to a lot of competitive pressure, Gadia said.

However, Gadia said RRHI—a multiformat retailer—would maintain a “more disciplined” approach to store expansion so that there would be no cannibalization of market share among its own outlets, which tended to happen when the same outlets were located too close to one another.

RRHI is spending about P6 billion this year to expand its store network across different formats and end the year with a nationwide footprint of about 1,600 stores. In 2014, RRHI ended the year with a total of 1,327 stores.