2004 Jan Issue
Cover Story
Retail Outlook 2004 - Singapore: Retailers tread cautiously
Other Stories
Retail Outlook 2004 - India: Organised retailing set for rapid growth
Retail Outlook 2004 - The Philippines: Coming up roses
Retail Outlook 2004 - Malaysia: A better but more challenging year ahead
Snooping on shoppers


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Retail Outlook 2004
The Philippines: Coming up roses

Rosy and robust. That is the forecast for the Philippines’ retail sector, which is pinning its hopes on a fast-growing population and steady flow of remittance by Filipinos working abroad, reports Tina Arceo-Dumlao from Manila.

With huge crowds thronging the established retail shops and bargain outlets, or tiangges , that dot Metro Manila, the Philippine retail industry looks set to continue posting a robust growth this year, despite jitters over the country‘s forthcoming elections.

Fuelled by a growing population and over US$6.3 billion in remittances from overseas Filipino workers (OFWs), the local retail sector expects to grow at least 5% in 2004, outpacing the country's gross domestic product (GDP) growth, pegged at about 4.5% for the year.

Behind these rosy figures are plans by leading mall operators and upcoming players to build at least 10 malls this year, taking advantage of malling becoming an integral part of the Filipino lifestyle.

When interviewed, Roberto Claudio, Philippine Retailers Association's (PRA) vice-president for external affairs, said that the prospects were still bright for the retail industry, which rides on the growth of the GDP and OFW remittances.

“Tariffs in the region are also going down, making more products available to Filipino consumers and retailers are flexible so they could easily shift pro­ducts to cater to changing tastes,” Claudio explained.

While recognising that the major growth drivers are increasing purchasing power and steady inflow of funds from OFWs to their families in the Philippines, he expects the national and local elections in May to bring a surge in spending to boost retail business.

Claudio describes 2003 as a mixed year for the retail industry, with some sectors showing improvement while others did not perform well.

Claudio, who also operates the successful Toby's sports shops in the Philippines, said the leisure and entertainment sectors did well in 2003, owing to growing health-consciousness.

Stores selling high-end pro­ducts, however, did not perform as well, and fine-dining restaurants paled in comparison to those that target the middle class.

“In the area of sports, we expect the good growth to continue next year, especially with the ­Philippines hosting the 2005 South-east Asian games. A lot of preparation would accompany that so there should be improvement,” said Claudio.

The PRA is organising a major conference this month to promote Manila as a shopping destination with myriad choices of retail outlets, from overseas brands to home-grown enterprises.

SM Prime Holdings Inc's vice-president, Millie Dizon, who also sees continued retail growth next year, says SM will continue to expand.

“We will be opening two malls south of Metro Manila and are reopening our department store in Makati with a new look. [Being in an] expansion mode is a statement that we see growth down the road,” said Dizon.

SM Prime, the owner and developer of SM Supermalls, expanded its gross floor area to 2.2 million sqm at end-2003, with the opening of two malls last year.

It now has 17 malls — eight in Metro Manila, five in Luzon, four in the Visayas and four in Mindanao.

Its expansion plans include the Mall of Asia within a 60ha property by the scenic Manila bay. This is a mixed-use development offering shopping and entertainment malls, hotels, office space, residential condominiums and leisure-sports amenities.

SM said the Mall of Asia is part of the group's plans to firmly establish the Philippines as a major shopping destination in Asia.

According to Rex C Drilon II, chief operating officer of Ortigas and Co Ltd, operator of Greenhills Shopping Center, another driver for growth in the retail sector is the “underground economy”, not measured in the GDP.

He said that the underground economy should contribute as much as 40% of the GDP. “This explains why the retail sector has been a steady performer while other industries have remained flat. It has been growing at a rate of 5% over the past year. The ­challenge is to beat that growth.”

Drilon reported that the Greenhills Shopping Center, a mecca for bargain hunters, especially during the holiday season, posted a 33% growth due to its redevelopment.

The shopping centre, one of the country's first, enjoys a huge patronage among the A, B and C income classes, which account for 60% of its shoppers. “We are also enjoying good patronage from the tourist market, and we are making more improvements [this] year,” Drilon said.

Another retail company that has mapped out expansion plans for the year in anticipation of retail growth is Novecento. The menswear chain's owner, Merle, said that it may add four more branches in 2004 to its current three.

“Business is good because we provide good quality and value for money. We can control the quality of our clothes as they are locally made, unlike those coming from China and Hong Kong. We also do our own designs so our clothes are unique,” said Drilon.

However, she foresees retail growth bringing stiffer competition as more retail outlets sprout up. “Small and medium-scale retailers like us find it difficult to compete with those that have big marketing budgets. Our only chance is to get customers by word of mouth [about] our quality, price and style,” she pointed out.

Richmond Lim of watch chain Time Depot is likewise expanding in 2004 to better service the needs of customers.

“Most of the growth in sales will come from servicing new markets. We expect that growth would be around 15%-18%,” he said.

Ana Cuervo of furniture chain Barnyard said that she was looking at opening a third outlet in 2004. “Growth really depends on the products, location and customer service. For growth to happen, you have to research on what the target market wants and needs, and be able to deliver in those aspects,” she said.

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