Consumers to benefit from retail trade war

CEBU, Philippines - Cebu will see a different retail trade landscape in 2015 while as consumers continue to enjoy the benefits of competition, local retailers on the other hand will have to strengthen their market foothold to stay in the loop.

The entry of international retail giants in Cebu’s fertile retail market in the last couple of years, specifically in 2014, is seen to heighten the pressure among local players. While this development excites the consumers, it may not be good for local retail businesses.

Consumers' purchasing power however, will continue to elevate, encouraging more and more new retail concepts to come in, including the well known brands.

"The year 2015 will still continue to grow since it's also nearing election year," said Philippine Retailers Association (PRA-Cebu) president Robert Go.

Go said the entry of new shopping malls, community centers, neighborhood commercial strips are just few of the indicators that the retail landscape in Cebu is beginning to enter into an exciting transition.

Primary Group of Companies already announced to open at least 15 shops here by 2015.

“Cebu’s retail industry has been growing by leaps and bounds and we want to be part of that. We think that the Cebuanos’ openness to new brands will further cement our footing in the retail industry here,” said Primer Group assistant vice president Johanns Tan.

Primer Group is engaged in the retail and distribution of premium consumer brands in outdoor, footwear, fashion, wellness and urban lifestyle.  Its stores include Bratpack, Ladybag, Res Toe Run, R.O.X., The Travel Club, Grind, General, Flight001and Sneekpeek that carries premium brands like DC, Roxy, Kickers, Sanuk, Sledgers, Native, Boxfresh, FitFlop, JanSport. The North Face, among others.

In Cebu, the company has about 30 stores carrying 100 premium brands.

Tan said at least 15 stores will be opened in Cebu once the SM Seaside City Cebu at the South Road Properties will open next year.

The improving purchasing power of Filipinos and its sophistication fuels the growth of the country’s retail industry.

“Filipino consumers have become more sophisticated now," he said adding that the consumers' willingness to embrace new brands allow retail stores to flourish here.

Significantly, the popularity of social media, also pushes strong consumer spending. Rustan's Group's Store Specialist Inc. also announced to bring in more branded and designer labels, including luxury brands in Cebu.

SSI president Anton Huang said that depending on the availability of commercial slots, the company which is part of the Rustan’s Group of Companies, is ready to bring in more international brands to Cebu market, as well as major urban areas in Visayas and Mindanao.

In an interview with Huang, he said that with the opening of wider Rustan’s Department Store in the new wing of Ayala Center Cebu, the company will be added more brands within the store such as Purla, Michael Korrs, among others.

The expanded Rustan's Department Store in Ayala Center opened int he early of December this year.

Already, SSI’s managed stores like Marks & Spencer, Calvin Klein, Beauty Bar, Lacoste, among others are enjoying brisk sales performance in Cebu, the reason why the company has brought in more international names in Cebu market with the opening of F&F, MUJI, GAP, Zara, Aeropostale, and Kate Spade.

Now handling at least 80 international brands trading in 650 stores nationwide, SSI is going to bring more new luxury and signature brands to the Philippines.

In the last three years, he said the company posted healthy growth of consistent double digit performance, and indication that the Philippine retail industry has continued to enjoy good business.

“The Philippine retail market has been very exciting in the recent years. We have extremely sophisticated consumers, as evidence of the success of Zara, Gap, Old Navy, Banana Republic and other designer label and signature brands here,” said Huang.

Cebu in particular has improved very well in terms of stores’ sales performance, Huang said.

According to Euromonitor, a global information publisher providing market research reports, that with the strengthening of the economy in the Philippines, luxury goods continued to perform at robust level. This was a direct result of the improvement of consumer purchasing power in the country, signaling the appeal of luxury goods, not only among high net worth individuals, but also other socio-economic classes, particularly employees of large corporate offices.

The research study contained that more wide-spread occurrence of dual-income households as well as opportunities to earn extra income from the rise of business process outsourcing services in the country, also contributed to the healthier performance of these high-end goods.

Demand for luxury goods is expected to remain on an upward trajectory. This will be attributed to the continued optimistic outlook for the country.

Furthermore, the dynamic efforts of companies to make their brands available and appealing to affluent consumers, via increased publicity and marketing campaigns, may also play a role in keeping demand robust.

Likewise. the Robinsons Specialty Stores Inc.  announced that it will be adding more shops to offer varied global fashion names in Cebu.

RSSI general manager Mina Quizon said that the company has noted a fast growing market for premium brands in Cebu, as well as other parts of the Southern Philippine market.

At present, the company has brought four premium fashion brands to Cebu, such as Topshop, Topman, Basic House, and recently the opening of European brand--Dorothy Perkins at Ayala Center Cebu.

According to Quizon, the company is on constant lookout for good commercial spaces to add on to its current portfolio of brands in Cebu.

She confirmed that because of the very updated and informed market, popular and established fashion brands are thriving in the Philippines.

RSSI has 13 brands under its portfolio - Topshop, Topman, Dorothy Perkins, Burton Menswear, Miss Selfridge, Warehouse, Ben Sherman, River Island, Shana, G2000 and Basic House - in partnership with the Arcadia Group Limited (United Kingdom), Aurora Fashions (United Kingdom), Ben Sherman Group Limited (United Kingdom), River Island Clothing Company Limited (United Kingdom), Comdifil Group (Spain), The Basic House Corp. (South Korea) and G2000 Apparel Limited (Hong Kong), along with cosmetic brands Shiseido and Benefit.

PRA-Cebu past president Jay Aldeguer said that while the appetite of international brands coming to Cebu is good both for consumers and the economy in general, this on the other hand is putting more pressure to local players to stay on top and ahead of the game and compete with the international players head-on. After-all, he said "this is our home-ground."

This means that local retail players should invest on branding efforts, improved merchandize choices, and other innovations in order to stay in the business, said Aldeguer.

Food retail on the other hand, although is also facing similar plight with apparel retail segment, is showing strength in terms of fighting with the international names, as homegrown restaurant brands, are starting to invest on enhancing their menus leveling to that of international standards.

"2015 is another exciting year for retail in Cebu," said PRA-Cebu former president Melanie Ng.

According to Ng, the fight in retail will only end in the physical presence or store openings, but local players are also encouraged to make stronger presence in the online market.

Retail sales of Filipino fashion brands have dropped by 50 percent in the first quarter of 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.

“They get bigger space and better location while our local brands like Penshoppe and Bench are relegated to the second floor,” Lim lamented.

Already, local business groups – Philippine Chamber of Commerce and Industry, Philippine Franchise Association and Philippine Retailers Association -- are discussing on strategies to help local retailers.

“We should be able to help them strategize to compete in this market,” Lim said.

One strategy, Lim said, is for Filipino retailers to establish mini stores or community stores to be able to reach out to a bigger mass market.

Community stores would be the answer to the big outlets of major foreign fashion retailers in the country.

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.

Starting 2015, big mall operators like SM, Ayala Malls, and Filinvest Group are set to open new shopping malls in Cebu. (FREEMAN)