Retail sales of Filipino fashion brands have dropped by 50 percent in the first quarter this year as big foreign brands with their unlimited resources dominate the domestic fashion sector.
Retail industry leader Samie Lim told reporters that local fashion retailers have failed to match the resources of the huge foreign brands which now occupy premium locations and big spaces in the country’s premier shopping centers.
“They get bigger space and better location while our local brands like Penshoppe and Bench are relegated to the second floor,” Lim lamented.
Already, local business groups – Philippine Chamber of Commerce and Industry, Philippine Franchise Association and Philippine Retailers Association — are discussing on strategies to help local retailers.
“We should be able to help them strategize to compete in this market,” he said.
One strategy, Lim said, is for Filipino retailers to establish mini stores or community stores to be able to reach out to a bigger mass market.
Community stores would be the answer to the big outlets of major foreign fashion retailers in the country.
Of late, the Philippines has become a destination by big fashion retailers such as Forever21 and Uniqlo. In August this year, Swedish fashion retail chain H&M is expected to open its first outlet in Megamall.
Earlier, Lim lamented that local retailers have always been at the mercy of their landlords or mall owners making it very difficult for a start-up retail company to open an outlet in a mall.
According to Lim, a mall tenant has to pay 6 to 8 months of rental deposits while others ask for 12 months. They have to post construction bond and payment for common spaces. A simple food cart requires P25,000 monthly rental.
Before a retailer can put up an outlet, he has to shell out almost P2 million in upfront cash.
“What is most disappointing is it is difficult to get the refund when you leave.
These people are getting money on top of money. We put money to build that mall,” said Lim, who called for the setting of minimum standards over rentals and advance deposits of mall owners on their tenants.
“Local retailers are also sent to the second or third floor where there is not enough foot traffic. In the supermarkets, they put us at the back,” he said.
“Because of this practice, the small retailers have difficulty competing. This makes inclusive growth difficult and this is the reason MSMEs (micro small and medium enterprises have not grown for the past 20 years,” Lim lamented.
The MSMEs account for 96.6 percent of the country’s total businesses and 61 percent of total employment while.
“We should protect these small entrepreneurs,” he said.
[via Bernie Magkilat, Manila Bulletin]