Note: This is the first part of a series on the Philippine retail market report.
While stories of retail doom and gloom abound in some corners of the globe, the Philippines is poised to be one of the focus markets by global brands in the coming years, according to the latest Cushman & Wakefield report titled, How Global Brands Are Shaping the Metro Manila Retailer Landscape 2017.
With opportunities arising from the spending power of a young workforce combined with changing consumer tastes, positive economic conditions and healthy competition among new and existing foreign brands, there is a positive outlook for the local retailer market. So what makes the Philippines a promising retail destination in Asia Pacific?
The report shows that a total of 113 new foreign brands have entered the local retailer scene in the past two years, with 39.3% from the Food and Beverage sector. The Clothing and Apparel sector captures 26.6% of the market. These two sectors are currently dominating the retailer scene in the Philippines.
According to the report, consumer spending in the Philippines continues to be driven by its young demographic. Generation Z consumers in particular – set to be the largest group of consumers by 2020, according to a 2015 Fitch report – are being targeted by select retailers and mall operators. The majority of young Filipinos work either in the Information Technology-Business Process Management (IT-BPM) industry, or overseas and the spending power of this demographic is helped by the affordability of credit and low interest rate schemes offered by financial institutions.
E-commerce is another trend shaping the industry, as the increasing number of online shoppers has also resulted in a growing number of retailers shifting their investment into online stores.
Taking advantage of the eating culture of Filipinos, mall operators are also enticing customers with new F&B concepts to drive more traffic to the mall. In 2016 alone, new foreign F&B brands such as Atelier Vivanda, Denny’s, Moe’s Southwest Grill, Texas Roadhouse, Namoo House, and Uma Uma Ramen/Horse’s Mouth entered the market. The entry of these F&B brands is driven in part by the growing trend of dining out.
While the majority of the existing global brands in the country come from Western countries, particularly Europe, Asian brands are now making their mark as well. Fifty-one of the new entrants are Asian brands – a figure that surpasses Europe and North America’s number of entrants.
For more insights on the Philippine retailer market, read the full report here.