Kevin Tan sees merging of malls, e-commerce and tourism


(Source: | July 4, 2018)

From his office on the 30th floor of Alliance Global Tower in Taguig, newly appointed Alliance Global Group Inc. (AGI) CEO Kevin Andrew L. Tan can see Uptown Mall, the 12th he helped build as head of Megaworld Lifestyle Malls. It was a position he held at the beginning of Megaworld’s massive expansion around the country starting with Eastwood City in Libis, Quezon City.

At 38, Kevin may be the youngest tycoon in the country as his appointment to AGI’s top post makes him responsible for the investment holding company that his father, billionaire Dr. Andrew L. Tan, founded. AGI counts among its companies Megaworld, Emperador Inc., Travellers International Hotel Group Inc., Golden Arches Development Corporation and Infracorp Development Inc.

Even though he has worked alongside his father since he was 21 and from day one he was being groomed to succeed him, the announcement of his promotion still came as a surprise to him. Literally. “I was attending a wedding abroad and I got a lot of messages congratulating me. I thought, for what? Then I looked at my email. My dad had emailed the board that we were going to announce some changes in the company and that was one of them — that I was being appointed as the new CEO.”

On Saturday Kevin opened Megaworld’s 17th mall, a three-level building that reflects Ilonggo culture in every way, located at the 72-hectare Iloilo Business Park (IBP). Megaworld has redeveloped the old Mandurriao Airport, which was decommissioned in 2007, into the city’s business park.

The P2.2 billion Festive Walk Mall is centered on art, culture and celebration. It brings in first-in-Iloilo brands that include Coffee Bean & Tea Leaf, TGIFriday’s, Korean stores Mumuso and Nature Republic, La Lola Churreria, Furniture Republic, Metro Dental, Binondo’s renowned Henry’s Camera store, DIY Hardware and Japan Home Center; beloved local brands Bench, Penshoppe, Kashieca and Regatta. The mall also has Wilcon Home Essentials, Wilcon’s first mall-based store in the whole of Visayas.

This is Iloilo’s first mall with two anchor supermarkets: Festive Market by Savemore, and Marketplace by Rustan’s, which marks its first entry in Western Visayas. Festive Market is the first-of-its-kind supermarket brand exclusively created by SM for Festive Walk Mall.

Connected to the mall is Festive Mall Annex, which will house government agencies like PhilHealth, Bureau of Immigration and LTO, as well as medical and wellness clinics. This will also be directly linked to Festive Walk Parade, a 1.1-kilometer dining and nightlife strip, and to the multi-level steel parking where the township’s transport hub will also be located.

“People here like live music and bands. I went around last night with some of my colleagues and took a look at the various nightspots to see what’s uso, what are they drinking, are our Emperador products out there, is brandy popular? We were out till 2 a.m. and the city was vibrant. There are so many young people in this city. There are 30,000 graduates every year, a number that’s second only to Manila. That’s the reason we came here.”

Festive Walk Mall has also an attached museum, the P110-million Iloilo Museum of Contemporary Art (ILOMOCA), which has a stunning collection of 148 works of art on loan from Iloilo native Ed Valencia, a New York investment banker and art collector.

“That was money well spent,” Kevin says of the museum housed in Casa de Emperador building. “Museums are museums, not really for business. We’ve created a foundation, not to acquire art but to give artists and works of art space in our townships. We want to inspire artists to do their work here and to hold workshops.”

Kevin adds, “I’m not much of a collector, but I’m a great admirer of the arts. Our partner Ed Valencia was instrumental in our project. He’s an expat and an avid collector and the idea for ILOMOCA started when he told me about his collection — thousands of them in storage. Then he said, ‘I really want to give back to Iloilo’ and I said, tamang tama because we have this big township. Festive Walk Mall was still just an idea then, and I told Ed, ‘I’ll build you the space.’ Then it became a bigger idea. We weren’t thinking of a contemporary museum and then we researched some more, we talked to the locals. We found out there’s a lot of artists based in Western Visayas, and Ed has a few of their works.”

Joan Miro, Marc Chagall, Philippine National Artists Arturo Luz and Ang Kiukok, Daniel de la Cruz, Nunelucio Alvarado, and Ilonggo artist Rock Drilon are some whose works are on display at ILOMOCA.

Malls, E-Commerce, Millennials & Generation Z

As part of Western Visayas — the administrative region composed of Iloilo, Aklan, Antique, Capiz, Guimaras and Negros Occidental — Iloilo tourism is expected to rise alongside BPOs hiring new grads and other businesses.

Kevin says, “We will continue to invest in the Philippines, especially in tourism. We have a target to build around 12,000 hotel rooms by 2021, making us the country’s biggest hotel developer by then. We also continue to expand our manufacturing business. Every year, we look at opportunities to expand our township concepts all over the country through our real estate businesses.

“We’re very strong in nightlife, we develop townships and retail that are strong in entertainment because our establishments target the young BPO workers, and a lot of that is nightlife-driven.”

Kevin considers Generation Z — the demographic after millennials born in the mid-1990s to mid-2000s — to be an important market to understand. “In fact, we’re gearing some of our locations toward them. They have different habits. Obviously, they have more exposure to online information, which makes young people well-informed and more intelligent in a sense. Also there’s a heavier reliance on technology and the Internet of things. Everything that you carry now is connected to the Internet. There are all these apps, smartphones, laptops, and gadgets that are coming out. Technology now plays a big part in people’s lives — and to an extent their shopping habits.”

And in a time when online shopping has encroached the retail business of malls, Megaworld may have found the right template to stay relevant with its Iloilo Business Park (IBP) — by building not just a mall but also a museum that opens the community’s eyes and provides a venue for its thriving art scene, and then surrounding these two with a convention center (Megaworld donated the land where it was built), hotels, BPOs, and residential and commercial buildings.

“There’s definitely going to be a merging of malls and online shopping and they will continue to thrive together. Neither will exist without the other. Online retailers are investing now in physical stores, and retailers are also investing to create their own e-commerce platforms. There’s a lot of cross expansions.

“We’re putting the young-market brands here and also local designers and retailers. The Ilonggos are very well-travelled; the airport now has direct flights to Hong Kong, which means they have disposable income and there’s a demand for travel and they bring back with them a lot of ideas.”

Megaworld malls have always allocated 30 to 40 percent of their leasable space to restaurants and the rest to stores, and Kevin is convinced this is still the right balance between retail and food, but says that services (government offices, medical and the like) are becoming increasingly important for malls.

“Ultimately, we want to bring AGI and its various companies into the digital age. We continue to invest in technology in order to improve our customer experience across our businesses. There’s a lot of opportunities in using technology to improve the way we do business, whether in McDonalds, Emperador, our manufacturing, or for Megaworld, where we continue to build on our iTownships concept to further enhance our assets.”

Kevin adds, “Malls are a very competitive business and there are so many market leaders that are years ahead of us and have set such a high benchmark. I think Eastwood was a lot of learning from what others did, but in the process we established a certain identity. If you create a brand like Megaworld Lifestyle Malls you need to find your own edge, otherwise you’re just following.

“We’re very strong with concepts — we have a mall dedicated to Chinatown Museum (Lucky Chinatown Mall), one like Venice (Venice Grand Canal) and Festive Walk is more about Ilonggo culture and celebration. We have key themes that make our products different.”

He looks back at his early years in the company — his first job was selling condominiums, and then he was in sales and leasing before moving to management — and building malls. “We started the ‘lifestyle mall’ concept, which at the time was non-existent. It’s something that I am very passionate about. I think there’s no greater motivation than passion and that was the right kind of business for me. My dad knew what business would be appealing to me, and I was allowed to develop it and start it on my own. There was a lot of learning of course, but really, it was all about creating your own legacy within the company.”
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