Is e-commerce busting the malls?


The digital age is prompting stores to innovate

THE advent of e-commerce is just changing the retail property landscape, not at all threatening to bring brick-and-mortar stores to extinction, real estate analysts believe.

On the home front, Filipino consumers will still prefer to shop at the malls, at least in the short term, according to Antton Nordberg, head of research of KMC Mag Group, the
Philippine associate of global British property advisory firm Savills.

Nordberg said e-commerce would certainly have a stronger impact on the retail market in the long term, as retail sales are going to be more on the online side.

But then, he stressed, such should not be a threat to the property markets, but rather an opportunity for the physical stores to innovate.

“The retail sales are going online more and more,” Nordberg observed. “However, I don’t see it necessarily as a threat for the property markets, since it is just changing the nature of retailing and the physical stores into showrooms. Property markets just need to be innovative to earn from it.”

American commercial real estate firm CBRE has been tracking the development of e-commerce for several years.

In a recent report, CBRE said retail sales around the globe would still be stronger this year, vis-à-vis e-commerce sales.

“Stores and malls play a fundamental role in people’s lives by fulfilling immediate needs and providing leisure and entertainment opportunities,” the CBRE report said. “Hence, we do not see the growth of e-commerce as a threat to the sector.”

Based on CBRE’s How Consumers Shop Survey 2014, 87 percent of consumers in the Europe, Middle East and Africa (EMEA) still visit stores to buy their products.

CBRE noted that aside from e-commerce, social media applications is now becoming essential for retailers, especially in the fashion industry.

“In the face of an increasingly rapid and effective e-retail world, malls and stores are using omni-channel strategies to create customer engagement,” CBRE said. “The best-run malls are (even) adopting business-to-business apps to communicate real-time footfall information to retailers.”

CBRE said successful malls and town centers should require two-way digital communication strategies for websites, smartphone apps, social media, games and email marketing for closer client engagement.

Lisa Pomerantz, senior vice president of global communications and marketing at New York-based Michael Kors brand, cited the mobile application Snapchat, as a way to reach out to consumers.

“We’re always looking to tell our brand story on the platforms our fans are using and loving,” Pomerantz said. “Snapchat provided a unique opportunity to take our All Access Kors strategy a step further, allowing us to share intimate, behind-the-scenes moments from our runway show with fans around the world.”

E-commerce is a complimentary feature of the retail sector, said Janlo de los Reyes, manager of research and consultancy at global property advisor Cushman and Wakefield Philippines.

De los Reyes said e-commerce offers consumers the convenience of shopping without leaving their homes, but pointed out that this won’t endanger the malls business.

“No, I don’t think it will be a threat to the retail property sector,” De los Reyes said. “People still want to inspect the goods they are purchasing.”

He noted that e-commerce offers products that are mostly classified as “non-perishable goods,” such as clothing, which means consumers would still opt to buy other goods at the malls.

From another perspective, Claro Cordero Jr., head of research and consultancy in the Philippines of global property services firm Jones Lang Lasalle, said e-commerce would even give impetus to the resurgence of the logistics and warehousing property sector, complementing the now more active retail sector.

Julius Guevara, director for research and advisory at global property advisor Colliers International, shares this sentiment about virtual retail trade.

“This is a growth market that we’re very bullish about,” Cordero said. “We think that it would not only impact retail, but it could also positively impact the logistics and industrial market.”

He noted that some developers are considering the e-commerce trend.

“But I don’t know what their particular strategies are,” he said. “Moving forward, this is a sector that we need to pay close attention to.”


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