For retailers and mall developers, it’s still a good time to be in the Philippines. How so?
According to Colliers International Philippines, Filipino consumers remain drawn to physical malls and generally
enjoy seeing items and receiving face-to-face service.
There has also been an increased effort among Metro Manila malls to differentiate. Mall operators have become more aggressive in renovating spaces and housing “experiential and lifestyle-centric tenants to improve consumers’ retail experience and sustain footfall.” This move enables malls to appeal to a younger profile of mallgoers.
Hence, despite the rising vacancies seen in many regional malls, and the disruption on the traditional retail scene caused by e-commerce, there are enough reasons to believe that the retail landscape will remain strong.
Data from Colliers showed that Metro Manila’s vacancy rose to 10 percent in the first quarter of 2019 from 9 percent in the third quarter of 2018, due largely to the challenge faced by developers in filling up retail spaces completed in the past six to 18 months. About 93,000 sqm of new retail space was reportedly completed in the first quarter, expanding Metro Manila’s stock to 6.9 million sqm.
Colliers, however, believes that this rising vacancy offers an opportunity to improve tenancy, implement foreign retail experiences and maximize the use of technology and consumer analytics in the malls.
“Over the past two years, we have seen malls using pockets of vacancies and redevelopments to feature expansive family entertainment centers; develop a farm-to-market inspired food court; house Europe’s largest retailer of affordable sports equipment and apparel that offers sports training; curated retail and dining concepts from Japan and South Korea; and open an experience store with a media company,” Colliers said.
“Over the next three years, Colliers expects developers to further renovate and implement differentiation strategies to stay in the game and complement the sustained same-store sales growth of a number of retail firms,” it further explained.
Colliers is thus urging mall developers to use their renovation or expansion projects as an opportunity to expand food and beverage (F&B) tenants and upgrade other retail features such as cinemas and activity centers; to bring in interesting foreign retailers; and explore the viability of deploying consumer-assisting robots and tie up with app developers to better capture consumer preferences.
Colliers also believes that opening pop-up shops is an ideal option for F&B, sporting goods, e-commerce and clothing brands that are testing the Manila retail market, along with exhibitors in weekend markets in posh villages which are looking to cater to a larger consumer base.
“Developers should be more open to online retailers that use brick-and-mortar space for showrooming, or apportioning an area dedicated for product testing, but purchases are made online due to their affordability,” Colliers further added.