Expanding retail’s footprint on malls

By Jomarc Angelo M. Corpuz, Special Features and Content Writer

As a consumption-driven economy, retail has always been a thriving industry in the Philippines. According to data from the Philippine Retailers Association (PRA), the industry generated approximately P4.7 trillion in revenue for 2024 alone. This year, the PRA forecasts that number to grow by up to 15% or nearly P5.4 trillion driven by healthy remittances and a growing population.

Despite this growth, there are several roadblocks that could hinder the retail sector’s expansion. Chief among these are the perceived rise in the price of goods, the rise in vacancies in retail spaces, and strong competition from e-commerce.

While the country’s inflation rate did decelerate to 3.2% in 2024, it followed two years of elevated inflation, with rates reaching 5.98% in 2023 and 5.82% in 2022. The lingering effects of past inflationary spikes may have influenced consumers to become more price-conscious, prioritize essential goods, and seek greater value in their purchases.

Vacancies in the retail property segment have also been rising ever since closures from the pandemic. A Colliers report in the first quarter of 2024 noted that the vacancy rate in retail spaces was 15.5%, which is projected to increase to about 17% by the end of last year. This rising vacancy rate highlights the challenges faced by mall operators and retailers in attracting tenants and sustaining foot traffic.

With e-commerce gaining a major foothold among Filipino consumers, brick-and-mortar retailers have faced mounting pressure to stay relevant. Data from the PRA shows that e-commerce made up just 3%-5% of total retail sales pre-pandemic. By 2023, this share had surged to 20%-25%. This shift has forced traditional retailers to rethink strategies, with many struggling to compete against the convenience, variety, and competitive pricing of online platforms.

Facing these challenges, malls remain a key area in retail expansion, offering strategic spaces for brands to grow their footprint. Several strategies can be implemented by developers and retailers to attract more customers, bring people back to malls, and maintain relevance in an increasingly digital world.

One of the ways malls can help retail expand their footprint is by choosing the right tenants for their retail spaces. Several factors are usually taken into account when planning which brands these shopping centers should rent to — what customers want, what’s new in the industry, and what’s missing in the mall.

Rockwell Land Corp. Senior Leasing Manager Maiki Banzon revealed in an email interview that Rockwell does a lot of careful thought and planning into choosing what concepts to bring into their malls and that their main consideration is what they feel their customers would want to see in their shopping centers.

“We think of concepts that will delight our customers. We also keep an eye out for new and exciting international and local brands. We like to be able to bring in new brands or firsts in the country. We also consistently review our existing stores to see if there are any gaps in our offerings,” she explained.

Other than having the right mix of tenants, leveraging technology is another method to enhance the retail experience, attract more individuals, and make shopping more seamless, engaging, and rewarding for customers.

Rockwell Land Marketing Manager Elise Lim noted how technology has dramatically transformed the Rockwell retail experience in the last three years. The high-end shopping center developer has implemented various innovations from using QR codes as a means to enable its customers to shop and dine safely; to a comprehensive digital ecosystem that now houses a hybrid e-commerce platform with a physical pop-up store; a restaurant reservation system; digital parking payment methods; and the country’s first mall-wide artificial intelligence-powered rewards program.

“The Rockwellist mobile app has ultimately become a way for us to connect with the Rockwell community more meaningfully — making every visit to Power Plant Mall much more convenient, rewarding, and exciting. Aside from us being able to nurture relationships at scale, technology allows us to continue to do so with a personal Rockwell touch,” she said.

Making malls sustainable

Sustainability has also been a factor in attracting modern consumers, who are increasingly drawn to eco-friendly practices, energy-efficient spaces, and brands that prioritize environmental responsibility. Jovan Barrago, senior operations manager of Rockwell Land, shared that the mall chain’s sustainability initiatives revolve around energy, water, waste, architecture and landscaping, and people.

For energy, all of Rockwell’s retail locations use renewable energy through renewable energy services (RES) and the Green Energy Option Program (GEOP), using electricity from green energy sources such as geothermal power plants. This initiative reduces the mall chain’s greenhouse gas emissions by 80%.

Rockwell malls feature 100% LED lighting with automatic on/off controls, upgraded Chilled Water and Exhaust Motor Systems for reduced energy consumption, and installed direct current (DC) fast EV chargers to support sustainable transportation. These innovations led to Power Plant Mall winning second place in Best Greenhouse Gas Emissions among Makati malls from the Makati City Government last year.

Saving water is also an emphasis of the retail mall developer. Rockwell malls use low-flow fixtures, such as toilets and faucets, reducing water consumption by 60%-80% compared to traditional fixtures. Additionally, rainwater harvesting is implemented at Arton Strip, while water recycling is available at Santolan Town Plaza and will soon be introduced at Power Plant Mall.

Meanwhile, the company’s shopping centers prioritize waste management through a comprehensive segregation system. Food waste is converted into frass (compost) and donated to the Department of Environment and Natural Resources, while used cooking oil from food & beverage stores, and machinery oil are processed into bunker oil for reuse in the cement industry, promoting sustainability and responsible waste disposal.

Mr. Barrago also stressed the importance of integrating sustainable architecture and landscaping by utilizing natural lighting through glass roofs and skylights at Power Plant Mall. Green walls with plant vines along perimeter walls help regulate temperature, reducing cooling energy and greenhouse gas emissions.

With a focus on sustainability and well-being, Rockwell malls provide bicycle racks to encourage eco-friendly commuting. The company actively participates in Earth Hour to promote environmental awareness, and it also collaborates with local government units to conduct waste management seminars for retail tenants, fostering a culture of sustainability.

As malls continue to adapt to new challenges, they remain at the heart of the Philippine retail industry. Through different strategies that emphasize innovation and sustainability, these shopping centers reinforce their role as vibrant community hubs that drive economic growth helping the future of retail in the Philippines to thrive.