Phl retail segment faces competition

The Philippine retail segment faces intensified competition as discretionary spending among households in the Philippines has decreased due to the rising cost of living and the prioritization of necessities, according to global real estate services firm Cushman and Wakefield.

- MARIANNE GO

The CWK report confirms what I have observed for the past couple of years after the pandemic, which is that a lot of retail stores have closed and those remaining appear to be struggling to improve their sales. Major malls have and continue to see closures of some of their retail tenants, and it appears that there is a pivot more to personal care services and food outlets which continue to see brisk business, but mostly during the weekends and holidays.

According to CWK, the pandemic and the resulting global economic slowdown have curbed spending.

To remain profitable and to drive innovation, CWK noted, several retailers, and developers have undergone significant makeovers to remain agile and to balance cost pressures both from the demand for new shopping experiences and maintaining a decent occupancy rate due to its loyal locators. The rate of redevelopment efforts has accelerated, coupled with the need to include additional features in newly completed developments to enhance the shoppers' experience following the pandemic period.

According to Claro Cordero Jr., head of research, consulting and advisory services, Philippines at CWK, "As consumer preferences move toward experiential retail, which offers immersive, engaging and personalized shopping experiences, aging malls need to innovate to stay competitive. The noticeable trend among aging retail developments is the dwindling footfall rate due to their inability to adapt to the evolving 'next normal' in retail shopping, primarily due to their outdated infrastructure, lack of modern amenities and inefficient space layout."

He believes that the recovery trajectory of the retail sector will vary across different shopping districts depending on the concentration of developments and the quality of available retail space. Maturing retail developments are faced with challenges due to low foot traffic and mounting capital expenditure allocation for space redevelopment.