July 19, 2018, 12:04 am
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Retail to grow 2-3% this year

Retailers continue to see growth albeit at a modest pace of 2 to 3 percent this year amid stiff competition.

Paul Santos, president of the Philippine Retailers Association (PRA) in an interview said online retail is seeing faster growth of about 15 to 20 percent although this is less than a percent of total retail sales which he estimates at hundreds of billions of pesos.

“Some surveys look at 2-3 percent growth,” said Santos on the sidelines of the National Retailers Conference and Expo at the SMX Convention Center yesterday.

Santos attributes the expected growth of the retail sector to a growing population, a rising per capita income due to the economic growth as well as the sustained strength of overseas remittances all of which lead to spending.

“This is a still a consumption led (economy). We are 100 million in population and (flow of) remittances is resilient,” he said.

Another retail spending driver is the business process outsourcing sector, Santos said.

Competition from foreign retailers has widened the choices for consumers but also drives domestic players to more efficient.

Some of the recent entrants are Decathlon, a sporting goods retailer from France. Swedish furniture brand Ikea will also soon to set up shop in the country.

But Santos said despite the liberalization of retail trade about 20 years ago, “we’d expect more foreigners... but that did not happen in the way we (thought).”

He added foreign retailers choose to enter via reliable local partners which understand the market, mostly by way of franchise.

Foreign players also see the “the volume is not big enough” to justify entry on their own which would require them investing in infrastructure and distribution.

Santos said more and more Filipino retailers now tap both online and offline or omni channels to maximize the reach of the market and compete in their niches,

“Physical retail is very sensory but online’s advantage is the information it can give to the consumer. Some retailers are taking advantage of the strengths of both,” Santos said.

“We see a lot of growth in online due the innovation it introduces that catches the attention of consumers,” he added.

Santos also said the mall culture in the Philippines is not about to fizzle out as shopping centers have evolved into “public spaces” especially in urban areas.

“Back in the 1980s, shopping centers were just for shopping. But this soon changed as malls offer (much than shopping,” said Santos referring to restaurants, services like government services, hospitals, churches and meeting places.

Santos added developers have also integrated malls in residential and office buildings that give them a captive market.

“(Malls) will stay… it’s (malling) too deep rooted to disappear, not soon,” he said. – Reuters 
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