Gearing up for holiday spending
Developers with upcoming malls should carefully assess the retail mix that they will offer to
consumers. (HTTPS://WWW.TRIPZILLA.PH)
The impact of revenge spending across the country is starting to dissipate so the challenge for mall operators and retailers now is to sustain footfall and consumer spending.
Colliers sees holiday-induced spending partly offsetting this projected slowdown. We are optimistic of sustained interest from retailers especially those interested to occupy brick-and-mortar mall space in prime locations across the capital region. We are projecting a slight increase in vacancy starting 2024 due to substantial delivery of new mall space.
Colliers believes that mall operators and retailers should cash in on holiday spending across the country. Holiday marketing initiatives should be amplified while mall operators should use the festive season as an opportunity to reactivate activity centers and curate events to attract more mallgoers and entice them to spend more.
Developers with upcoming malls should carefully assess the retail mix that they will offer to consumers. While operators and retailers continue to welcome more customers in-store, both should work together in improving the omnichannel shopping experience of Filipino consumers.
Amplify holiday marketing initiatives
Colliers believes that retailers need to ramp up their online and offline strategies especially now that demand is likely to increase due to holiday spending. In our view, holiday bonuses and additional remittances from Filipinos working abroad are likely to boost Filipinos’ purchasing power in the fourth quarter of 2023 and retailers and mall operators should seize this additional push for Filipinos’ propensity to spend.
Reactivate activity centers, curate events
In our view, mall operators should maximize the consumers’ willingness to visit brick-and-mortar mall spaces and participate in various activities held in malls’ activity centers. Events such as wedding fairs, bazaars, and even housing summits can entice more consumers to visit malls, stay longer and even spend more. Colliers believes that mall operators and retailers should closely coordinate in curating events that will be held in malls’ activity centers.
Reassess retail mix
In our view, mall operators should carefully reassess the retail mix that they will be offering their consumers given the entry of more foreign retailers and expansion of local ones. This will especially be crucial for new malls that will open in the fourth quarter of 2023 and are planning to maximize holiday-induced spending from Filipino consumers.
Colliers believes that mall operators should cash in on holiday spending across the country. (FILE PHOTO)
While majority of retailers that will occupy physical mall space will be from the food and beverage (F&B) segment, mall operators should thoroughly assess the ideal retailers that they will be featuring in their malls alongside the typical F&B, accessories, and personal care retailers. Mall operators should carefully study which retail mix will provide them with optimal level of spending from consumers as well as sustained footfall for the long term.
Ramp up omnichannel strategy and cash in on holiday spending
Mall operators and retailers should work hand in hand in improving the omnichannel shopping experience of consumers. While Filipinos have returned to brick-and-mortar shopping, retailers should also consider the segment of Filipino shoppers that continue to buy items online. In our view, redesigning of physical mall spaces should be complemented by the improvement of the retailers’ online shopping platforms. We see a continued reconfiguration of physical mall spaces and we see this trend even after holiday-induced spending in the fourth quarter.
Vacancy to increase in 2024
In the third quarter of 2023, vacancy across malls in Metro Manila rose to 14.4 percent from 14 percent in the first quarter due to new supply. Meanwhile, major developers have reported that revenues from malls grew between 40 percent and 50 percent year-on-year as of the first half of 2023 due to higher occupancy and rental charges. In 2024, Colliers expects vacancy to rise to about 17 percent as we project the delivery of about 385,900 sqm (4.2 million sq feet) of new retail space.
Colliers Philippines believes that retail space take-up will further accelerate for the remainder of 2023 as mall operators and tenants zero in on holiday-induced spending. We are now seeing the impact of Retail Trade Liberalization Law on physical mall space absorption. With rising interest on the Philippine retail landscape, Colliers expects the entry of more anchor tenants particularly in major regional and super-regional malls across the capital region.
The Philippine economy is primarily consumption-driven, and this entices foreign retailers to invest in the country.
Headwinds remain, but tailwinds are on the horizon
We see a strong retail in the fourth quarter due mainly to holiday-induced spending. But the challenge for mall operators and retailers is how to sustain footfall especially now that the impact of revenge spending is starting to dissipate. We project more foreign retailers opening shop, but the completion of additional malls in Metro Manila will likely raise vacancies and exert a downward pressure on retail rents starting 2024.
