Part II
Observations have started to float about the high concentration of malls in Metro Manila. It is not uncommon to see malls that are within less than a kilometer from each other, particularly in the busy stretches of EDSA and even Marcos Highway in suburban Pasig-Marikina area.
Colliers International Philippines in a briefing early in the year noted that vacancy rates were increasing in many established shopping malls. Most of them have the same high-profile retailers, and analysts have come to observe that shopping malls exhibit parity in terms of the mix of brand locators, thus, limiting customer choices and experiences.
SM Prime, which owns the famous SM Malls has 56 malls in the Philippines, 20 of which are in Metro Manila, and they accounted for more than 50 percent of mall revenues in 2016. Robinsons Land, on the other hand, operated 40 malls as of 2016.
Shifting to online markets
Weak branded retail locators in malls are being closed even in areas of high foot traffic. As a result, many of them have shifted their distribution and placement strategy to online markets. Large-format online retail establishments like Lazada have all but willingly taken in lesser-known brands because its value proposition is to provide customers a bewildering, myriad selection of products and brands.
The survey confirmed the high levels of online shopping in Lazada (55 percent) and Zalora (35 percent), both of which already have established brand trust among internet shopping aficionados. Metrodeals (30 percent) and Deal Grocer (9 percent) which specialize in service products like dining, spa and personal services at discounted prices also cornered a significant chunk of internet shoppers.
Increasing level of comfort
Research firm Euromonitor International assessed that growth in internet retailing will be driven not just by increased smartphone and internet penetration. It said smartphone penetration is forecast to reach 180 percent in 2017 in the Philippines.
More than this, it pointed out that greater numbers of consumers are also developing an increasing level of comfort in the access and use of the internet for online buying. However, it noted that consumers are still likely to shop in physical stores.
The empirical study has borne out this observation. Surveyed netizens exhibited in general positive attitudes towards internet shopping. More than 55 percent agreed that online buying saved time for them.
Nevertheless, a lower percentage (but still very significant at 46 percent) believed that it was more convenient than going to a brick-and-mortar store. The same percentage (46 percent) claimed to enjoy shopping in the internet.
Dichotomy of shoppers
The study therefore uncovered a dichotomy of shoppers. The majority of more than 54 percent still expressed strong preference to shop and buy in physical stores where they can touch and try the merchandize. This same ratio of netizens also enjoyed interactions not just with the product, but also with sales staff whom they can personally consult with on their requirements.
The slightly lower minority of 45 percent to 46 percent of shoppers showed a preference for internet shopping, with 12 percent to 14 percent reporting strong preference. Close to 40 percent browse internet “stores” for bargains and deals, and slightly higher percentage (42 percent) read online advertisements.
A force to reckon with
With higher consumer spending on the back of the robust BPO sector and strong domestic economic growth, online markets have become a force to reckon with. Retailers have thus adopted mixed channel strategy of using a combination of physical trade channels and online distribution.
Established brands have either developed their own online stores or have partnered with Lazada and Zalora as third-party merchants. Even trade channels such as SM Retail and Robinsons Appliances have partnered with Lazada to distribute and sell their various home furnishings and appliance product lines.
What is clear is that while shoppers still flock malls, malls should re-think and redesign their concepts and value propositions in the medium term. In the US, the landscape of shopping centers is changing towards lifestyle malls that offer more varied dining, experiences and entertainment, according to Kantar Retail.
Analysts agree that malls need to reinvent in order to stay relevant. Because, like it or not, online markets are here to stay.
Dr. Gañac is assistant professorial lecturer in the Ramon Del Rosario College of Business of the De La Salle University. He joined the academe in 2012 after a broad and varied career in corporate communications, corporate marketing, corporate social responsibility and investor relations spanning more than 30 years. He teaches Strategic Marketing, Consumer Behavior, Marketing Research, Public Relations among other subjects under the Marketing Management program of DLSU. He can be reached at claro.ganac@dlsu.edu.ph
The views expressed here are the author’s and do not necessarily reflect the official position of DLSU, its faculty, and its administrators.