In contrast to many large format stores rightsizing and shopping centers closing down in many parts of the world, retail in the Philippines remains vigorous and upbeat.
In a recent Nikkei Business Philippines-Japan Investment Forum in Tokyo, Japan, SM Supermalls chief operating officer Steven Tan said a combination of market forces—robust overseas Filipino workers’ remittances and sustained activity in the business process outsourcing industry– fuel consistent growth in the Philippine economy and drive consumer purchasing power.
“Unlike how it is in many parts of the world, retail in the Philippines is vibrant, upbeat and full of opportunity,” Tan said in his address before a gathering of 500 CEOs and business leaders in Japan.
Tan said the growth of the Philippine economy, supported by the government’s massive infrastructure push, is directly impacting consumer sentiment in the Philippines.
As of end-September 2019, consumer confidence in the Philippines was the second highest in the world, a shade behind India.
“Optimism to spend among Filipinos is more than just a sentiment. We see it translating into actual consumer behavior, especially retail,” Tan said.
With robust consumer sentiment and activity, total retail sales in the Philippines grew 6 percent in 2018.
“It is interesting to note how brick-and-mortar retail continues to dominate and how it will continue to grow alongside the growth of internet retailing in the Philippines. The Philippine environment is conducive to all kinds of retail, both digital and brick-and-mortar as we look at opportunities in both channels,” Tan said.
With such forces at work and to borrow the government’s tourism mantra, retail is still “more fun in the Philippines” due to optimistic consumers and a thriving mall culture that continue to draw foreign retailers.
In particular, for the past five years, Tan said there has been a growing number of foreign brands entering the market particularly in food and beverage as well as clothing and apparel. The attractiveness of the Philippine market to foreign retailers is further enhanced by an average rental rate that is highly competitive when compared with other ASEAN countries such as Vietnam and Indonesia.
He encouraged Japanese retailers to consider three immediate opportunities in the Philippines: food, beauty and health and well-being as there is growing interest in Japanese brands in the malls.
The Nikkei Business Forum had the theme, “Inclusive Growth of the Philippines and Partnering Philippines for Japan/ASEAN Transformation”.