‘Foreign arrivals growth a boon to Philippines retail sector’

MANILA, Philippines — The continued growth of foreign arrivals in the country is a boon to the country’s retail market, a property consultancy said.

“As the benefits of booming tourism spread across different sectors, the retail segment also banks on the influx of high-spending foreign arrivals and long-staying visitors, which are seen to further boost retail activities,” Cushman and Wakefield Philippines said in a report.

“This was manifested by Duty Free Philippines Corp., a state-owned retail company, which cemented a partnership with global payment brand, UnionPay, for a new rewards program as they target the growing number of Chinese tourists in increasing Duty Free Philippines’ market share,” it added.

Latest data from the Department of Tourism (DOT) show that Chinese arrivals reached 1.6 million arrivals from January to November 2019, 40 percent higher than the 1.16 million arrivals in the same period in 2018.

Total foreign arrivals in 11 months last year grew 15.58 percent to 7.4 million.

DFPC reported earlier that 2019 sales grew four percent to $226 million from $217 million in 2018.

Without disclosing exact figures, DFPC said nationwide sales in the first three weeks of January are 15 percent higher than sales in the same period last year.

“We are still finalizing it but we are optimistic that we will maintain our upward trajectory,” DFPC chief operating officer Vicente Pelagio Angala said when asked of the company’s sales growth target this year.

He cited the opening of new stores, as well as the continued influx of Chinese and Korean tourists as among the growth drivers for the company this year.

The DOT earlier identified shopping as the top activity done by tourists visiting the country in 2017, with 51.60 percent of tourists taking part in it.

Shopping is also where tourist spend a large amount of expenditure on, as it amounts to $20.90 dollars of the average daily expenditure per capita in 2017 of $125.65.

“The significance of the booming tourism industry to the Philippine economy is incontestable with its 13 percent share of employment to total employment and the immense share of tourism related revenue to the gross domestic product (GDP),” Cushman and Wakefield said.

Data from the Philippine Statistics Authority (PSA) show that the tourism sector’s GDP contribution reached 12.7 percent to P2.2 trillion.

Apart from growth of the tourism industry, Cushman and Wakefield identified the overall strong economic fundamentals of the Philippine economy as a factor seen to sustain the growth trajectory of the major drivers of the retail sector, such as higher consumer spending driven by remittances and the information technology-business process management (IT-BPM) sector.

“The local retail scene will also continue to defy the global retail headwinds of declining retail footfall and store closures as the Filipinos see retail establishments to be more than a place to shop,” Cushman and Wakefield said.

It added that shopping centers in the country have become essential structures also for socialization, leisure and entertainment.

“However, the challenge would be on how the retailers will be able to keep up with the increasing competition with new concepts incessantly being introduced in the market and how they can satisfy the increasing complexity of consumer preferences,” the property consultancy said.