Cebu retail sector stood its ground amid a crunch

CEBU, Philippines —  Coming from inflationary bruised year in 2018, the retail business in Cebu sustained its glory in 2019. It even welcomed a new shopping mall before it could land to another year.

But while the retail business in brick and mortar continuously face threats from the advent of online shopping, Cebu’s retail texture is still largely defined by it, and players are confident the traditional retail platform cannot be shaken by other forms—in its case technology.

“Brick and mortar [retail] will stay. It continues to be relevant,” said Jennylle Tupaz,, President of AyalaLand Malls, Inc. amid fears that the physical retail concept will ultimately be overtaken by the online shopping or virtual stores.

In the Philippines specifically, Tupaz explained that the culture which loves to celebrate, bond and get-together even without special occasion or a social culture provides conducive environment for physical retail or shopping and leisure malls.

Even the Philippines’ neighbors, like Thailand, among others shopping malls are still thriving, and even expanding.

Likewise, mall developer, Robinsons Land Corporation (RLC), considered the year 2019 as defining year of growth, as its properties within Cebu and other parts of the Visayas performed quite strongly, said Floramie Adolfo, Senior Regional Operations Manager for RLC Eastern Visayas operations.

According to Adolfo, the brick and mortar retail trade in the Philippines remains lucrative and upbeat despite the threat of online shopping, saying shopping malls continue to play significant role in Filipinos’ lifestyle, as it functions more than a shopping hub, but a venue to bond for families, friends and even business people.

Even the young breed of market segment are still going to the malls—shop, dine and celebrate, contrary to the impression that the advent of online shopping affected the shopping malls’ businesses.

African Swine Fever

Aside from online shopping, the retail industry faced another crisis in 2019, which pulled down the revenue streams of some food related business, particularly pork related.

According to Philippine Retailers Association (PRA-Cebu) president the retail business in food showed a dramatic slowdown following the confirmed entry ASF virus in the Philippines towards the third quarter of 2019.

Although Cebu was spared from the infection, consumers’ conscious avoidance from pork took its toll even as the province was declared unaffected.

“Supermarkets hit by pork ban and pork canned category drop in sales by half,” reported Go, who also owns Prine Hypermart chain of stores.

Modest

In general, 2019 provided the retail sector a good year. Go described it as modest.

Cebuanos’ improving purchasing power fuelled by constant flow of OFW remittance, high salary rates of BPOs (Business Process Outsourcing), souring demand of construction workers, more money-making opportunities in real estate related services, among others, made retail business more lucrative than expected, said Go.

Fashion and other auxiliary goods however, showed slower movement, as money was more spent in food, travel, and gadgets.

The modest growth in retail, Go said indicated a healthy environment for expansion.

Cebu’s tourism edge added color and life to the retail performance in 2019, as the entry of Chinese nationals both tourists and those working in online gaming pushed brisk sales.

Small Retailers

Despite the development of super-regional malls, such as the opening of AyalaMalls Central Bloc in Cebu IT Park early this month in December 2019, smaller retail shops, specifically in down town area are still thriving.

Market analyst and research head for Colliers International Philippines, Joey Roi Bondoc said.

“The downtown area which houses some of the oldest retail outlets remains bustling,” Bondoc noted.

Over-all Cebu’s retail market sustained its luster amid several threats it faced in 2019. “Cebu’s retail market remains interesting and competitive.”

The entry of national players to share the fertile ground in retail on the other hand is giving homegrown players to protect their share and be the ones to take advantage of the opportunities before the outsiders can devour of its economic juice.

The year 2019 has already set the field of retail in higher level—thriving in between brick and mortar and online retail space, as the market continuous their shopping regimen; online and offline.