As restrictions ease, Filipinos troop to malls

While Filipinos have embraced online shopping while locked down in their homes during this pandemic, e-commerce is unlikely to eclipse the mall-going culture in this part of the world, according to a research report from First Metro Securities.

The brokerage house said in its latest property research note that as quarantine protocols ease, e-commerce will continue to grow, albeit at a slower pace, as this would be “supplementary” rather than a “competitor” to brick-and-mortar store sales.

“Impulse spending online should decelerate as the availability of more spending options shift attention away from the screen. This is especially true as the further reopening of the economy should bring households out of their homes and back to schools, offices and places of social gathering,” the research said.

FirstMetroSec added that delivery services were adding friction costs to purchases which, for some consumers, may be difficult to absorb.

“The Filipinos’ mall-going culture is far from being undone – malls in the Philippines are central to consumers’ social and family life. As quarantine measures are further relaxed, resulting in better mobility, we see a shift in consumer spending back to stores,” the report said.

“We are of the view that the Filipino ‘mall-going’ culture is unwavering, as evidenced by improved mall foot traffic which is fostering a recovery in tenant sales.”

FirstMetroSec noted that rebound in tenant sales had been more pronounced now that foot traffic was recovering. As mall operators have continued to expand amid the pandemic, it noted that a higher leasable area base should allow rental revenues to revert to prepandemic levels faster.

The brokerage house sees the retail property segment posting a speedier earnings rebound in the next 12 months amid a sustained easing of restrictions, recovery of tenant sales, and reversion to pre-COVID rental rates. It sees rental concessions coming off faster than the consensus expects. The brokerage house noted that its view, however, hinged largely on higher allowable operating capacity for malls. Any pushback on age restrictions and limitations on permissible activities is seen to derail recovery expectations.