Retailers feel pinch of online shopping

By Iris Gonzales (The Philippine Star), Aug 21, 2017

MANILA, Philippines – The country’s retailers are now feeling the pinch of heightened competition from the once ignored, but now rapidly growing online shopping business, industry players told The Star.

Samie Lim, chairman emeritus of the Philippine Retailers Association (PRA), said many of their members are losing some customers to online shopping, which has become a craze among consumers because of convenience and worsening traffic in Metro Manila.

Among the popular online retail sites in the country are Zalora, Lazada and Weemall.

“Definitely, with online we’re affected. The numbers are not yet big now but obviously it is growing very fast,” Lim said in a recent interview.

The online retail market now accounts for about five to six percent of the total retail market from just one to two percent a few years ago, Lim said.

To cope with the situation, brick and mortar retailers are stepping up their game by launching promotions and season sales.

The PRA, the national organization of all retailers in the country, is also in talks with mall operators to help retailers cope with the situation.

“Retailers are saying their biggest expense is rent which is why others are just going online so we should talk to the mall operators to bring down the rent,” Lim said.

He said if traditional retailers don’t do anything about it, online sellers may soon eat a huge chunk of the market.

“The tipping point may be in five years,” Lim said.

Philippine Chamber of Commerce and Industry president George Barcelon shared the same view.

He said competition from online stores is growing, noting the need to ensure a level playing field.

“We want to make sure they are paying the right taxes,” Barcelon said.

Some of the country’s mall operators, for their part, concede that online retailing is indeed growing and that they are doing innovations to keep their malls filled with customers.

“We expect online retail to grow in the coming years but we continue to upgrade our mall offerings to include more exciting and experiential features that are resilient to online retailing,” SM Prime Holdings Inc. president Jeffrey Lim told The Star.

At present, SM Prime has 63 shopping malls all over the country with a gross floor area of 7.8 million square meters.

Ayala Corp. chief finance officer TG Limcaoco said it would take a long time before e-commerce goes full blast in the Philippines, but the conglomerate is making sure malls will remain popular.

“There is a need to shift the model to make malls a lifestyle and entertainment destinations,” he said.

As of end-2016, Ayala had 45 malls in operation.

But e-commerce still has a lot of room for improvement because delivery of items still takes days in the Philippines, Limcaoco added.

“We need to get logistics in place.

In the US or in Europe, delivery is on the same day,” he said.

The Villar Group likewise believes brick and mortar shopping would stay even as it recognized that online retailing is growing.

“You can’t say it is not going to happen but for now it hasn’t affected us because e-commerce still has some serious obstacles such as

slow internet and there also some problems in logistics,” Vista Land president and CEO Manuel Paolo Villar said.

He said there some items that are popular online such as cellphones, apparel and books but others major needs such as groceries would still be in shopping malls.

The Philippine e-commerce market was valued at $500 million in 2015 and is expected to grow to $9.7 billion by 2025, according to a May 2016 report by Google/Temasek.