(Source: Business Mirror | October 3, 2017)
The discussion on where the path of retail will lead continues, with the follow up event of Urban Land Institute (ULI) Philippines called the Debate: The Future of Retail.
Together with A Space Philippines, ULI Philippines brought together a panel recently that is ready to tackle on the big question of where the local retail industry will be in the next five years and beyond—all in the cozy setting of the Gallery at A Space Greenbelt.
As the disruption of the retail sector continues with the rise of innovative trends, technology and changing consumer preferences, several questions stay top of mind for both developers and consumers alike: Will large malls suffer in the future? Will physical stores become obsolete? Can technology overcome bad infrastructure?
This new session format provides both the audience and the speakers to answer these questions candidly. The panelists present in the debate covered the spectrum of the industry; there was Richard Raymundo, deputy managing director of Colliers International Philippines; Christophe Vicic, country head of JLL Philippines; Zid Santos, executive of The Anthem Group; and Kevin Yapjoco, manager of Signet Philippines; all enthusiastic for the chance to interact and share their knowledge to the audience.
They all expressed their views on each turn, agreeing or disagreeing with each statement thrown at them. Unanimously they agreed that physical stores would remain in the local context—they would simply have to evolve and change over time. Vicic noted that even in Europe, physical stores continue to exist in spite of massive online penetration.
The Philippines, while relatively young to the emerging online market, is responding quickly to the rapid changes in consumer behavior. Already, a majority of retail players are bringing in different concepts in food and beverage and entertainment to ensure that consumers will go to an actual store. Concepts, however, are encouraged to embrace e-commerce, as digital components are no longer just a “nice-to-have”—now they have become part of the requirement to stay relevant.
Foreign brands will also continue to dominate local brands. The only area where local brands dominate, Raymundo shared, is furniture. This, however, may be due to change with the arrival of IKEA on Philippine shores.
On whether large malls will suffer more, Yapjoco provided a different perspective from the rest of the panel, who believes that large malls will remain relatively unscathed: For him, midsized malls have much more room for flexibility and unique concepts, compared to large malls that have all become indistinguishable with the same retailers in different cities.
For all panelists, real-estate developers will also continue to play a large role in retail. Santos pointed out that tenancy mix and location are all part and parcel of the developers’ strategy to remain relevant in the industry.
On the second part of the debate, two additional panelists joined the fray: Ernest Sy, managing partner of The Millennium, a content fevelopment and social media marketing agency; and Kolleen Feria, senior marketing officer and retail business development Head of Felipe & Sons. They provided context on the marketing side for retail—the challenges, as well as advice for those who are interested in dabbling in retail.
Questions on whether Filipino-owned retail businesses will become globally competitive in the future or what advice the panel would give to a sari-sari owner allowed the debaters to exercise their knowledge in a local text. For this, Sy advocated for the use of digital technology. This was not limited to social media—e-mail campaigns, text blasts, search engine optimization are all ways to harness the ever-evolving technology. An online presence would help local businesses compete with foreign ones.
As the question on whether to support a physical real estate or e-commerce came into play, the panel grew divisive. Asked on whether they would invest in a physical store or e-commerce, the majority of the panelists chose the former. Feria preferred to invest in the latter—for her who has seen the phenomenal growth of e-commerce, who is to say where it will be in the next five years? The potential for the returns may be beyond expectations.
The debate ended with more questions from the audience, as there is no clear winner given as there is no actual side to defend. For all panelists, the continuing topic of retail is different for all players—whether for developers, retailers and consumers. There can only be learnings from experience and from the global trends, most of which have shifted with the advent of technology.
It can be said that the future of retail will enjoy the mix of both. Consumers can benefit from the bevy of options, while developers and retailers can be challenged to improve further to remain in fierce competition with foreign brands. The one thing they can all conclude is that the future of retail is exciting and full of opportunities—it is up to the key players to take the risks.
The event drew in an audience of more than just retailers and developers, all eager to learn more about the future of retail. The event, in partnership with A Space Philippines, the leading coworking space in the country, was hosted by the ULI Philippines. This is the first of the many event collaborations between A Space and ULI, meant to bring forth the real-estate industry in contact with the crowd of millennials, coworking advocates and other innovative professionals to provide an enriched discussion on various contexts.
ULI is a nonprofit research and education organization supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Founded in 1936, the institute has now more than 40,000 members worldwide representing the entire spectrum of land use and real-estate development disciplines, working in private enterprise and public service. These events encourage open discussion of the current trends among all real-estate practitioners. The retail industry is one of the strengths of the local Philippine market—and time will tell if it can face the future.