INTERNATIONAL RETAILERS continued to flock to the Philippines last year, eager to sate Filipinos’ appetite for new brands and restaurants, according to a report by the local unit of real estate services firm Cushman & Wakefield.
In its January report entitled “How Global Brands are Shaping the Metro Manila Retailer Landscape,” Cushman & Wakefield Phils., Inc. said 34 new foreign brands entered the country between January and November 2019. This brought to 102 the total number of international brands that have set up shop in the Philippines since 2017.
“One of the segments that is directly benefiting from the sustained growth of the Philippine economy is the retail sector. Evidently, amidst slowdown in retail activities in other parts of the world,… foreign retailers continue to venture and thrive in the local retail scene,” it said.
Most of the new brand entries are mid-tier food and beverage (F&B) retailers, Cushman & Wakefield noted.
Among these are American brands such as Shake Shack, Popeyes Louisiana Kitchen, and Panda Express, as well as Japan’s Menya Kokoro, FRNK, and Shari Shari Kakigori House. Taiwan’s The Alley, Hong Kong’s Hui Lau Shan, and Sri Lanka’s Ministry of Crab also recently set up shop in the country.
“With competition, reinforced by the advent of strong concepts… the food services market remains attractive to international brands attributable to the country’s ideal demographic make-up,” Cushman & Wakefield said.
Data from Cushman & Wakefield Research showed food and beverage brands accounted for 68% of new brands that entered the Philippines in January to November 2019, followed by clothing and apparel brands at 15%.
The Philippines has also attracted a growing number of Asian retailers, particularly from Japan (17 brands) and Singapore (12 brands).
“Asian brands are strengthening their grip in the food services industry as they focus on bringing F&B concepts in the market,” Cushman & Wakefield said.
International retailers are eager to take advantage of the Philippines’ continued economic growth, young population, growing middle class, improving ease of doing business and booming tourism, Cushman & Wakefield said.
Also, shopping mall space is projected to hit 9.8 million square meters (sq.m.) in 2022 through expansions in the so-called Bay Area that covers Manila, Pasay and Parañaque. As of fourth quarter of 2019, the supply of mid- to high-end malls in Metro Manila stood at 8.9 million sq.m.
“The expansion of shopping mall developments in Bay Area is also in response to the vibrant real estate activities brought about by the rapid growth of real estate demand coming from the Philippine Offshore Gaming Operations (POGO) and the IT-BPM sectors,” Cushman & Wakefield said.
Monthly rent in key malls in Metro Manila is also relatively cheaper than its regional peers at $48 (about P2,440) per sq.m., Cushman & Wakefield said. To compare, monthly mall space rent in Indonesia is $70 per sq.m.; $127 per sq.m. in Thailand; and $165 per sq.m. in Vietnam.
Moving forward, Cushman & Wakefield said it is important for retailers to continue innovating to remain relevant, offering various activities in shopping malls.
“The strong economic fundamentals of the Philippine economy are seen to sustain the growth trajectory of the major demand drivers of the retail sector. The local retail scene will also continue to defy the global retail headwinds… as the Filipinos see retail establishments to be more than a place to shop. Shopping centers in the country had become essential structures also for socialization, leisure, and entertainment,” it said.
“However, the challenge would be on how the retailers will be able keep up with the increasing competition with new concepts incessantly being introduced in the market and how they can satisfy the increasing complexity of consumer preferences,” it added. — Denise A. Valdez