eCommerce frenzy weakensas shoppers return to normal

CEBU, Philippines —  Despite gaining ground for the past two years, the eCommerce platform is now facing challenges as consumers are now transitioning back to the ‘old normal’, such as shopping in-store.

Kantar Philippines client manager Bea Coronel said Filipino shoppers are now returning to traditional retail channels, such as shopping malls. While small retail outlets like sari-sari stores, hypermarts sustain their dominant position in terms of attracting customers.

At present, the eCommerce platform captured only 10 percent of Filipino household consumers particularly in buying Fast Moving Consumer Goods (FMCG). The re-opening of the economy and increased mobility posed challenges to the eCommerce retail platform, Coronel said thus, there is a need for online retailers to shape up, and find their niche in the market.

She said there is a need to differentiate themselves from other eCommerce traders. Because of delivery costs and other added expenses, most customers prefer to go out and shop in physical stores.

For the FMCG segment, eCommerce did not create a huge impact even during the lockdown, she added.

Meanwhile, in a separate interview with Cebuano restaurateur Jan Gerard Rodriguez, he said just like shopping malls, other brick-and-mortar retail channels are now starting to gain life again in business, saying “there is no more new normal. We are back to normal again.”

Rodriquez, who operates several restaurant brands in Cebu, including “Ilaputi” and “Weekend”, said that people are starting to go out, and even spend more “celebrating life” coming from the strange experience of lockdown in the last two years.

“People are tired of eating at home. Whether we like it or not, we are going back to normal,” Rodriguez said. He revealed that he is launching more brick-and-mortar food outlet brands in the next few months.

In Metro Cebu, Colliers Philippines forecast revealed that retailers will expect to post profits after a two-year business slowdown, driven by the “revenge spending” phenomenon which already started.

“Metro Cebu will benefit from the retail sector’s recovery as it is the largest metropolitan hub outside Metro Manila,” revealed Colliers Philippines' latest outlook.

 According to Colliers, the expansion of its consumer base, supported by Colliers’ projected growth in office and residential supply, should sustain retail buoyancy post-2022.

 In the first quarter of 2022, vacancies across malls in Metro Cebu reached 6.4 percent higher than the 2.6 percent recorded in 2018.

The Covid-19-induced disruptions have resulted in the closure of some brick-and-mortar shops especially in regional and super-regional (50,000 square meters and above of leasable area) malls.

Colliers estimates that about 60 percent of upcoming retailers in Cebu are likely to come from food and beverage (F&B) retailers followed by clothing and footwear at 17 percent. This is similar to what was observed in Metro Manila in the first quarter of 2022, where F&B accounted for 42 percent of new retailers followed by clothing at 17 percent.

  By the end of 2022, Colliers sees vacancy dropping to about 5.5 percent as Colliers projects retail space absorption to pick up amid limited new supply.

The enactment of stimulus measures, such as the Foreign Investments Act and Retail Trade Liberalization Act, should also facilitate the entry of foreign retailers and contribute to greater retail space take-up beyond 2022.