Renovating facilities to keep up with the competition

CEBU’S RETAIL sector

It’s a game of keeping up with competition for Cebu’s local retail industry players amid the entry of larger national and even international brands.

The challenge posed by these bigger entities are already pushing local companies to improve their own facilities, and products and services, noted the Philippine Retailers Association (PRA) in Cebu.

According to Robert Go, PRA Cebu president, the younger market, especially the millennials, has been the major driver for the retail sector like malls.

“The modern customers are very choosy especially the millennials. They like to go where it’s hip. They want to see and to be seen. Majority of our shoppers now are millennials and every retailer has to really keep up,” he told Cebu Daily News.

White Gold move

This was why Go, who is also the president and chief operations officer of Prince Warehouse Club Inc., welcomed the announcement of White Gold Club that they will be renovating their mall located along A. Soriano Ave. in the North Reclamation Area (NRA) in Cebu City.

White Gold Club General Manager Joseph Gaisano Jr. earlier told CDN that they will be closing their property starting end of June to embark on a renovation that will cost them at least P1 billion.

From a supermarket and department store, the property is expected to expand into a four-level mall with basement parking, an atrium, and cinemas among other new offerings.

According to Go, the decision of White Gold Club to renovate their property, which is over 20 years old, was a good sign that the local mall is still trying to keep up with the competition in the NRA despite the presence of SM City Cebu and the fairly new Robinsons Galleria Cebu.

“They also have their strength because they are very big in Davao. It’s good that they are going to change it to a mall. It’s about time. It’s always a challenge because when people are tired of your stores, it’s time to innovate and keep up. It’s always like that,” Go explained.

Acquired by giants

Being unable to keep up with competition are pushing smaller retailers to be acquired by giants, according to Go who cited as an example the Rustan retail chain which was recently bought by Robinsons.

Other examples include the Cebu drug store chain ThreeSixty Pharmacy being bought by Puregold Price Club Inc. and the Generics Pharmacy being bought by Ayala Corp.

Go lamented that the PRA Cebu has also lost some of its members due to the intense competition in the industry but at the same time, he pointed out that there are also new players coming in as new members, making the industry still healthy.

PRA Cebu currently has around 100 members.

‘Sense of destination’

Property management and research firm Colliers International Philippines also sees the renovation and expansion plans of White Gold Club as an indication of growing opportunities for the retail and property sector in Cebu.

“The fact that they are expanding means that they see growing opportunity in that area. Although what we’re seeing in Manila is that some developers are expanding but they are retaining their profile and image that they have been known for for years,” said Colliers’ Research Manager Joey Bondoc.
As an example, Greenhills Shopping Center is being expanded by Ortigas and Company which plans to bring in local and foreign retailers into to the property which has been known over the years for its “tiangge” and affordable tenants.

But despite the expansion, the company is retaining the “tiangge” sellers who will be sharing the space with the new retailers.

This brand and profile retention is also underscored by White Gold Club in its expansion plans.

“We’ve always been known to be very price conscious, price sensitive. We also try to have things no one else would like to carry like houseware stuff, kitchen stuff. We have good quality and adorable stuff. There’s a lot of cheap stuff but they break easily. So we try to make premium available,” Gaisano said.

Biggest mistake

“Right now, there’s a lot of talks about the death of retail. But I think for Cebu, the biggest mistake is to try to be everything for everyone. I think right now, you have to pick a niche and develop your niche,” he added.

Gaisano explained that they aim to also be a destination where people do not just shop but where they meet with friends and spend family time.

This “sense of destination” for malls is also an important factor for them to continue customer patronage; as well as differentiating themselves from their competition.

“It’s okay to retain old tenants or their old profile. But at the same time, you have to differentiate. Now is an opportunity to use additional space, to invite new tenants and come up with an interesting retail and merchandise mix and to create a sense of destination,” Bondoc said.

Right move

Learning some of the planned amenities and offerings of the new White Gold Club, Bondoc said the company is doing the right thing in order to cater to the younger market.

“E-commerce is emerging. What you want is for consumers to go to your physical mall, to experience something which they cannot experience when they are shopping online or tinkering with their phones,” he said.

Online shopping platforms like Lazada and Zalora have also become popular among shoppers who want to avoid having to go all the way to malls to buy things they need. Unlike other countries, brick-and-mortar outlets are still more popular in Cebu.

Retail hub

According to Colliers, Cebu is still the largest retail hub outside of Metro Manila.

Based on data from Colliers, Cebu’s retail stock reached 1.06 million square meters (sq.m.) which is more than double the level in 2010.

Super-regional malls or retail outlets with GLA (gross leaseable area) of more than 100,000 sq.m. account for over 60 percent of Cebu’s retail stock.

These properties include SM Seaside City, SM City Cebu, and Ayala Center Cebu.

On the other hand, regional outlets such as SM Consolacion and Robinsons Galleria Cebu covers 10 percent of the market while the smaller district centers and neighborhood outlets primarily located in the downtown area cover the remaining 30 percent.

These smaller establishments are predominantly owned by local businessmen. Among the neighborhood and district malls in Cebu are CityMalls in Bacalso and Consolacion,as well as those owned by the Gaisano family.