Local retailers seek LGU protection

CEBU, Philippines - The Philippine Retailers Association (PRA-Cebu) will be working with the local government units in Cebu City and Mandaue City to protect home grown retailers that are slowly affected by the entry of global retail giants.

"Many of our home grown retailers are helpless and find nowhere to go, either deteriorating or are running out of business for being too dependent on malls," said PRA-Cebu president Robert Go in interview with The Freeman yesterday.

Go said PRA is studying how to protect local home grown retailers in partnership with the City Councils of both Cebu and Mandaue,  to possibly come up with resolutions for local retailers’ protection.

Initially, PRA-Cebu will coordinate with Cebu City Councilor Nestor Archival to draft a resolution to persuade malls to provide special non-discriminatory locations and special rates for businesses located in Cebu and Mandaue, he said,

The fight of the retail sector now is not only how to cope with increased competition, but also fighting to make themselves "seen" as the retail landlords now tend to favor those companies that have "deep pockets."

"PRA is studying the advocacy on malls to give favorable rental rates and  non-discriminating space for Cebu home grown retailers before their market share will be swallowed up entirely by international brands. Big names in the fashion segment for instance are occupying the selected best frontage area easing out the locals who once were occupying the area," said Go.

"Many of the home grown were invited by these malls to occupy their spaces giving them preferential rates to lure them in during the early beginning of these malls. Yet, those that made it good and have grown were either copied by the mall owners and later on their contracts are no longer renewed, or rates were increased exorbitantly that these local tenants cannot sustain," he added.

GO said other home grown concepts were given stiff competition by franchisees or mall owners.

He claimed that some mall owners are copying the business concepts of their successful tenants, and ultimately pressuring the home grown tenants with higher rental rates or transfer them to locations with lesser customer traffic..

Because of this, Go said home grown businesses suffer from less profitability  or worst closing shop.

"Mall owners are now franchising foreign big  names and global brands and putting them in the best locations and home grown tenants were being relocated to non-valuable locations callous of their renovation cost that runs to millions of pesos in capital expenditure," said Go.

Retail sales of Filipino fashion brands have dropped by 50 percent in the first quarter 2014, as big foreign brands with their unlimited resources dominate the domestic fashion sector.

Retail industry leader Samie Lim earlier said 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.

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 six to eight 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,” Lim added.

“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. (FREEMAN)