SYDNEY — As Australia’s local merchants struggle with an influx of global names, leading malls are considering returning to their village center roots to woo new tenants by moving away from shops and offering medical facilities, more restaurants and even amusement parks.
Several top retailers have recently succumbed to pressure from foreign giants such as Japan’s Uniqlo and Sephora of France and with Amazon plotting its debut in the country, the future looks tough.
The response from developers has been to redefine the mall away from a “shopping” focus to become a more community-driven service and entertainment space.
While cafes and restaurants have long helped attract shoppers to malls, they are now filling shopping centers, providing some buzz even as an eerie quiet fills some nearby clothing stores.
With the big global names pouring huge sums of cash into the country, once popular clothing chains such as David Lawrence, Pumpkin Patch, Herringbone, and Rhodes & Beckett have bitten the dust, while others scramble to reduce costs.
This has included cutting back on bricks and mortar stores, and steering center owners towards food, entertainment, health care and childcare providers.
Major landlords such as Vicinity and Westfield spin-off Scentre, which this year have seen their share prices slip to one or two-year lows, are already redeveloping their arcades.
Vicinity’s Chadstone Shopping Centre in Melbourne, Australia’s largest mall, is now the site of the southern hemisphere’s first massive amusement park Legoland.
The company is also tapping into newer technologies such as facial recognition to identify consumers through their age and gender and analyze their shopping habits.
“What we are seeing is the malls starting to pivot away from commodity-type products… towards retailers that offer a service which isn’t physical,” real estate firm Cushman & Wakefield’s retail investments head Nick Potter told AFP.
“Shopping centers are the modern village, it’s where everyone comes together. These centers are typically located in the center of towns, they’ve got strong infrastructure… and that offers up the ability to move with the times.”
UTOPIAN VISION
The move is a return to the vision of Victor Gruent, an Austrian-born American who in the 1950s developed the concept of the arcade as a public space akin to the market place of centuries past, where civic life played a central role.
Adding to the shift is the growth of online shopping, which offers shoppers the same options but with the added bonus of not being subject to general sales tax (GST) for anything below Aus$1,000 (US$760).
Canberra has sought to end the loophole by imposing a 10% levy from next July but the lower margins for online store such as eBay and ASOS still makes them attractive.
While online shopping is estimated to make up a little more than 10% of total retail sales, future arrivals such as Amazon could change that.
“If (online shopping) jumps up in a big way, how does that affect bricks and mortar? Maybe all shopping centres just become cafes,” University of Technology Sydney accounting expert David Bond told AFP.
“You’ll probably see it move more towards just products being sold online, versus services, cafes, cinemas, game centers and creches (at malls).”
The University of Canberra’s Lisa Scharoun, who analyzes the cultural role of shopping centers in societies, has seen the changes first-hand, with more than half of a local mall now filled with restaurants and cafes.
Scharoun said developers were moving away from hosting consumption-driven stores and were more willing to lease space to other users such as churches and libraries.
“I think that the mall is evolving back to what it was actually intended to be when it was first conceived,” she told AFP. “It was supposed to be like an enclosed community space… a utopian vision of Victor Gruen.” — AFP
THE PESO may gain against the dollar this week after US inflation came out weaker than expected and hawkish bets on the European Central Bank’s (ECB) next move, as well as the recent comments of US Federal Reserve Janet L. Yellen on gradually hiking interest rates.
The local currency ended last week weaker, closing at P50.65 versus the greenback on Friday, 12 centavos lower from the previous session’s close of P50.53 per dollar. Week-on-week, the peso also slid from its P50.58-a-dollar close last July 7.
An analyst said the exchange rate could settle at P50.40 to P50.80 this week, with the peso expected to have an upward bias on the back of weak key US economic reports, as well as likely hawkish statements from the ECB at its meeting this week.
“The dollar might depreciate this week, driven by softer US reports on retail sales and inflation as well as likely hawkish statements from the European Central Bank,” Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines, said in an e-mail.
ECB policy makers meet on Thursday. The central bank is keen to keep its asset purchases open-ended rather than setting a potentially distant date on which bond-buying will stop, to retain flexibility in case the outlook sours, Reuters reported.
Meanwhile, US consumer price index remained unchanged in June versus the 0.1% drop in May after the price of gasoline and mobile phone services continued to decline, the government reported on Friday.
The US Commerce Department also reported that retail sales dropped by 0.2% in June, anchored by a slump in receipts at service stations, clothing stores and supermarkets. Year-on-year, retail sales increased 28% by end-June.
Following these weak economic reports, prospects of a third monetary tightening by the Fed before the year ends have dimmed.
CME Group’s FedWatch program bared financial entities are now pricing in a 47% chance of another interest rate hike in December, 55% down from previous data.
“The dollar’s projected decline might be tempered by safe-haven buying amid possibly weaker Chinese data on retail sales, industrial production and overall economic growth,” Mr. Dumalagan said.
“The factors that could reverse the dollar’s projected downward bias include weaker-than-expected Chinese reports, more hawkish remarks from US policy makers, and unexpected dovish comments from the ECB,” he added.
Meanwhile, a trader said the exchange rate for this week will depend on US inflation data and the tone of the Fed.
“Important data on US inflation and the Fed’s remarks will dictate the movement of the peso this week,” the trader said by phone on Friday, noting the peso could move within a wide range of P50.40 to P50.80 against the dollar this week.
Another trader said the peso could remain in consolidation, with trading range likely to fall within P50.40 to P50.70 today. — J.M.D. Soliman
BANKS and similar firms must “keep pace” with emerging financial technology (fintech) in the face of rising competition, the country’s central bank chief said, while ensuring that firms maintain prudence as they venture into the new field.
Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said the influx of electronic financial products stands to help broaden financial inclusion in the country, with the central bank keen on embracing such technology.
“Banking products, financial services and needs, technology and consumer preferences are always levelling up. We have to keep pace,” Mr. Espenilla said in a speech before the Bankers Institute of the Philippines on Friday. “We do this with training and education. We do this with updated and relevant regulations.”
“We at the BSP have raised the bar of prudential standards to promote resilience in the banking system and market discipline for risk-taking activities.”
The BSP chief said the central bank is bent on allowing new financial products, particularly those that make use of digital channels in the Philippines, as these are expected to help more Filipinos gain access to formal banking channels. Mr. Espenilla said the central bank has been welcoming of such innovations as it continues to update rules on corporate governance and risk management, specifically to allow fintech players to offer their services in the Philippines.
“New sophisticated players such as financial technology solution providers have entered the market. This is a good thing as these bring about a notable and gradual unbundling of the traditional value chain in the Philippines and intimately links banks closer to customers,” Mr. Espenilla said, while flagging that the concern now is on cybersecurity.
Embracing new financial products will likewise make economic growth more inclusive and “meaningful,” the BSP chief added.
The new governor said in June that the central bank is currently drafting enhanced rules on information technology, as part of a general thrust to tighten rules to guard against cyber threats. — Melissa Luz T. Lopez
Suits The C-Suite
By Alvin G. Manuel
The level of interconnection in today’s digital ecosystem has created tremendous opportunities for organizations to work together by extending capabilities and sharing data. However, having an interwoven ecosystem — of service providers, contact centers, distributors, licensees, joint ventures and other third parties — has created a much larger flank allowing attackers to skirt around security measures by targeting less secure connections among third parties. For example, recent security breaches that affected Target and Yahoo prove how dangerous unsecured third parties can be and that an organization can be blamed for security vulnerabilities it had little to do with.
In the Philippines, the third-party problem is real. Security risks can come from vendors that use poorly conceived, insecure business processes to manage systems. For example, service providers may connect through remote backdoor access for maintaining and supporting their clients’ internal systems. In some cases, service providers would use software that is no longer supported, full of vulnerabilities and impractical to patch. Vendors could also be using administrative passwords in systems installed at all their customers’ sites. And there could be instances when contact center agents put sticky notes around their cubicles with passwords to the organization’s systems or customers’ credit card information and personal information.
These situations may sound dismal but third-party service providers are not entirely to be blamed for this mess. Due to dynamic business requirements, speed-to-market pressures and a highly competitive environment, organizations simply purchase third-party services and software with operational benefits in mind while neglecting security and data privacy. We have seen organizations that do not pay close attention during contract negotiations. Some agreements do not even clearly identify who is responsible for safeguarding the organization’s information or notifying the organization in case of a data breach.
Organizations only realize the broken trust after a vendor’s fraudulent or unsecured activities are uncovered, like when a customer informs the organization that his or her personal information has been used for some dubious activity, or when management salaries are suddenly shared inappropriately.
The EY Global Information Security Survey 2016-17 confirms that third-party risk management is a major area of risk which is often overlooked, as evidenced by the following findings:
• 68% of respondents disclosed that they would not increase their information security spending even if a supplier was attacked — even though a supplier may provide attackers with a direct route into the organization.
• 58% said they would not increase their spending if a major competitor was attacked — despite the fact that cyber criminals often attack organizations that are similar in infrastructure and operating frameworks.
The report thus encourages organizations to be more mindful of the impact that their external network has on how they protect their crown jewels. With the increased risk from third parties, a comprehensive risk management system becomes essential in order for organizations to validate the trust they place on third parties — which should cover the entire life cycle of the relationship, from selection to implementation to exiting. This system should include the following elements:
1. KNOW YOU THIRD PARTIES
Understand your ecosystem. Maintain a database of third parties, relationship owners, contract terms, reputation and locations of operations. What level of access do they have to your critical information? Which business processes are outsourced to them? What security and privacy measures are in place? Are these third parties further subcontracting activities to their own vendors?
Using the gathered information, the organization should then take steps to determine the risk profile for each third party in its ecosystem.
2. INCLUDE SECURITY AND DATA PRIVACY PROVISIONS IN AGREEMENTS
By creating a risk profile for the third party, the organization can determine the level of security controls and activities that the third party should have in place. These security requirements should also become mandatory terms during agreement negotiations. Should the agreement involve the sharing or outsourced processing of personal data, the organization must include the required data sharing or outsourcing stipulations of the Data Privacy Act of 2012 to ensure that proper safeguards are in place to ensure the confidentiality, integrity and availability of personal data processed; and prevent its use for unauthorized purposes.
Cybersecurity, data privacy, legal and compliance teams should always be present during purchasing, contracting, onboarding and exit discussions. These steps can go a long way toward setting the tone of discussion about the seriousness of cybersecurity and data privacy to the organization.
3. TRUST, BUT VERIFY
Third parties, as well as the security and data privacy provisions in their contracts, should be reviewed on an ongoing basis throughout the relationship with the organization. The frequency of reviews should be dependent on the risk profile, regulatory requirements or changes in the threat environment.
We should note that contract terms and imposition of penalties are important, but should not be the focus of these periodic reviews. Ultimately, security is a joint responsibility. Putting a third party on the defensive may just push them to refute all findings and provide excuses just to avoid penalties. Instead, the organization should set the tone of trust and transparency in their third-party relationships.
Organizations should also consider using assurance options as proof of independent assessments of their third parties’ security and privacy practices such as the Service Organization Control 2, the Payment Card Industry Data Security Standard, or ISO 27001:2013.
4. NEVER BE COMPLACENT
Given the increasing complexity of the cyber world, organizations can no longer rely solely on ad hoc processes and one-time assessments of their third parties. The organization must maintain effective processes to manage risks and incorporate lessons learned from third-party relationships in a way that is consistent with its goals, organizational objectives and risk appetite.
5. INVOLVE LEADERSHIP AND THE RIGHT RELATIONSHIPS
In the digital world, trust in third parties is rapidly becoming a strategic foundation for any business. This necessitates that the responsibility for third-party risk management should move from operational staff to organizational leadership. At the end of the day, management will be accountable for third-party risks and breaches. As a rule, most companies vet the business integrity and performance of third-party vendors and business contacts before granting accreditation. In the same way, reviewing the third party’s security and data privacy systems should become a standard operating procedure for companies to further manage and mitigate the new risks arising in the digital age.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.
Alvin G. Manuel is a Director from the
Advisory Services Group of SGV & Co.
