Buoyed by what they say was a good holiday sale season, despite challenges like monstrous gridlocks that affected foot traffic in the malls, major retailers are upbeat about tackling customers’ demands, foremost of which is fast delivery of goods.
“Fast retailing just got faster,” says Donnie Tantoco, president of Rustan Commercial Corp. “Speed, an important trend in retail for over decade, just got faster. This is expressed in fast fashion, limited-time-only products, flash sales, pop-ups, self-service checkouts and kiosks. This is driven by millennials who want fast response and instant gratification.”
Owing to the worsening metro traffic and the increase in smartphone users, e-commerce will become more and more attractive to consumers, they say.
“For 2017, the projected number of smartphone users in the Philippines is estimated to reach 33.3 million,” says Johnson Go, general manager of Robinsons Department Store. “And with close to 60 percent of Filipinos connected to the internet, we see online shopping or digital commerce growing at a faster pace and continue to disrupt the retail landscape in a wider scope.”
Retailer Emerson Yao concurs. “E-commerce will further put pressure on mall-based retail stores,” says Yao, managing director of Lucerne Luxe, whose portfolio consists of luxury Swiss and mid-priced watches, as well as jewelry brands. “We will be affected if customer traffic is reduced.”
In another interview last November, Yao said, however, that luxury goods will not be affected by the rise of online shopping, as buyers for luxury Swiss watches, for instance, prefer to see the actual merchandise before a purchase.
Experience retailing
Tantoco also sees what he calls “experience retailing” to be a trend this year, as consumers demand added engagement in the way they shop.
“Consumers want shopping to include entertainment, education, emotion, engagement and enlightenment,” he says. “Experiences create value for customers beyond the products or services that companies happen to sell. Properly executed, customer experience can be the biggest point of differentiation from competitors.”
Last Christmas, Rustan’s held “beauty workshops, fashion and even kitchen events. It’s all about engaging our customers in ways that are relevant to and resonate with them,” he says. Tantoco also sees enhanced social-media environments—like “in-store selfie points, Instagrammable concepts and set-ups, as well as sharable content”—to become crucial to retailers as these boost shoppers’ retail experience.
“The consumer’s busy lifestyle and the influence of social media on food and fashion choices influenced mall visits in a good way,” says Steven Tan, senior vice president of SM Supermalls. “People always want to be the first to try a new restaurant or a new dish, and we provided that in 2016.”
Another growth segment will be sustainable concepts, as Filipino shoppers become more socially aware, Tan adds.
“The rise of sustainable brands is in, and our retailers are rising to this challenge,” Tan says. “Our retailers are now going paperless and using eco-bags. It is now the age of the environmentally conscious consumer, and we enjoin all our tenants to participate in their own unique ways.”
Marilou Koa, managing director of Euro Mode Inc., local franchise owner of brands like Escada and Van Laack, says her company’s strategy is “efficient sourcing to narrow the pricing gap between Europe and the Philippines,” to make shopping for luxury brands more attractive here.
Koa is putting this to the test with her new multibrand luxury fashion store, Moressi, which opened over the holidays at S Maison in Conrad Manila. It offers coveted and hard-to-find pieces from major European luxury brands, including apparel, bags, shoes, eyewear and accessories.
Customer traffic
The high US dollar exchange rate was also a major factor that saved what could have been a dismal retail year.
“Our devalued peso helped in keeping shoppers buying local, even as travel is very popular,” says Yao. “The strong US dollar made it unattractive to buy luxury goods abroad… As a whole, the market grew modestly, and while some malls performed better than others, the decrease in foot traffic in some stores was mainly due to road traffic concerns.”
“Customer traffic in our stores was comparatively higher in 2016, resulting in an increase in transaction count and average customer spend,” says Go. “Despite more shopping days leading to Christmas, which fell on a Sunday, there was still heavy last-minute shopping… Another factor that helped influence higher customer spend was the appreciation of the dollar versus the local currency.”
Tan agrees. “Sales were especially good this Christmas season, as OFWs took advantage of the exchange rate and sent more money home, or came home themselves,” he says. “We saw a surge in the dining segment, because families and friends ate out, and SM offered many new restaurant concepts for our customers to choose from. The surge in Christmas shopping came later than usual, though, perhaps because of busy schedules. But when it came, it was good.”
Holiday weddings drove sales in luxury department store Rustan’s, where tableware, houseware, beddings and home appliance did really well, says Tantoco. The higher-end gifting items also sold well.
“Each one of our stores posted positive growth versus 2015,” Tantoco says. “We are pleased with the result, especially since the road traffic was especially horrendous during the holiday season.”
For luxury fashion, says Koa, “Although we did not meet our target, we still managed to achieve a single-digit growth.”
Lala Fojas, executive vice president and general manager of Shangri-La Plaza Mall, says the democratization of travel has also elevated expectations for local retail. “So, it’s not surprising that we have been experiencing a truly global and open market with more brands coming in from countries or places that we were not as exposed to before. And with the rise of a new wave of entrepreneurs, consumers are introduced and are given access to even more goods and services.”
Fojas also believes so-called “social-media influencers” will continue to have an increased impact in the decision making of shoppers.
She echoes what Tan says about consumers becoming more socially and environmentally aware, and that will influence the way they buy things.
“People’s continued awareness and desire for a healthier and more environmentally conscious lifestyle will drive them to seek out organic products, and dine at restaurants that offer organic food,” Fojas adds.
Ultimately, what customers are looking for, regardless of retail trends, is value for money, Koa says.
“Retail trends are very dynamic,” says Tan. “They change from season to season and consumers always want to wear the latest, change what’s old, while spending conscientiously.”