Retailers seek mall owners' help to fight foreign invasion

Katrina Domingo, ABS-CBN News

Posted at Aug 10 2017 05:05 PM

MANILA - Filipino retailers said Thursday they were seeking a dialogue with mall operators to help them cope with a barrage of foreign brands that have been squeezing their margins.

Fast-fashion giants H&M, Forever 21 and Uniqlo have occupied multi-level spaces in malls in recent years at the expense of local brands, who can't match their foreign rivals' resources.

The foreign brands add to challenges posed by bazaars and online shops, that sell comparable merchandise with considerably lower operating expenses, retailers said.

Filipino companies will ask mall owners to allocate the ground floors to them so that they could compete better, said Philippine Retailers Association chairman emeritus Samie Lim.

"Filipinos will go to foreign retailers anyway but if they will have to pass by the local retailers first, the local brands will have a chance," he told ABS-CBN News.

Some local brands have begun to look abroad to offset slowing domestic sales, said the group's president, Paul Santos.

"That's a new strategy to compete with foreign competition. If foreign brands come in to sell to Filipinos, local brands will go abroad to sell to foreigners," Santos said.

For premium retailers, the challenge posed by foreign brands should be seen as an opportunity to improve product quality.

"Wide assortment is good for everyone. What local brands have to do is to step up. The story of how Jollibee has stood its ground despite Mc Donald's (prove) there's room for everyone," said Irwin Lee, CEO of Rustan's Supercenters.

The next 5 years will be "critical" for local retail brands, Lim said, citing the additional threat from online shops and "pop-up" stores.

Lim said a requirement for retailers to make 12 months of advance rental payments was adding further strain.

Resources are further stretched as some malls require tenants to open stores in new malls to avoid getting "locked out" of upcoming locations.

"Local stores will never say their sales are going down. They keep putting up new stores because malls keep putting up new malls and we have no choice but to go with them otherwise we will be locked out of the next prime mall," Lim said.

"This is something that is stretching the limits of retailers. When you stretch a rubber band, it will eventually snap and we are near that snapping point," he said.