SM considers ‘clicks-to-bricks’ strategy to stay competitive

SM Prime Holdings, Inc. is looking to adopt a “clicks-to-bricks” strategy by the end of the year, as the country’s largest mall operator tries to get a piece of the growing e-commerce market.

“We’re doing efforts on ecommerce, ‘clicks-to-bricks,’ that’s in the works kasi. Yung ‘clicks-to-bricks,’ yung bricks ay yung mall... We are currently working on that, hopefully we can come up with something before the year ends,” SM Prime Chief Finance Officer John Nai Peng C. Ong told reporters after COL Financial’s property briefing in Pasig City on Saturday.

The “clicks- to- bricks” strategy is usually employed by online retailers who open physical stores, in an effort to build brand awareness, and to engage with customers.

In SM’s case, Mr. Ong said the strategy would support its brickand-mortar business, as buyers can go online to pick items they want to purchase from any mall tenants, and later pick up their orders from an SM mall.

“It would be on a phase by phase. It could be from the same store, or look for potentially delivering store to store. For example, you’re based here, pero meron kang family relatives sa Baguio, in which they, pwedeng ( you pick up from Baguio). There’s a Baguio mall anyway. Pwede ring click here in Metro Manila, but you will get the pick-up in the Baguio mall,” Mr. Ong said.

SM’s adoption of a “clicks-and-bricks” strategy comes as shopping malls and retailers around the world are facing intense pressure from e- commerce players. In the United States, around 25% of existing malls are expected to cease operations by 2022.

However, Mr. Ong noted that Filipinos are still generally mall-goers.

“When you go there, it’s not basically now to shop, it’s again a destination... We would like to bring them in, and it will bring them in and the tendency is you will shop more, and that will bring more value to us,” he said.

The SM Prime executive said there is a deliberate effort to shift the tenants mix in its malls, hoping to increase the number of food tenants to up to 35%, as opposed to the current 10-15% under their portfolio.

“It’s a deliberate effort... Given it’s a lifestyle approach, a destination where we go it’s not basically to shop. We would like to experience food, leisure, entertainment... There’s a lot of offerings,” Mr. Ong said, specifying SM Megamall as one of the malls where the company is testing out this new concept.

SM Prime is the holding firm for the SM group’s investments in the property sector, handling the shopping mall, retail, and residential developments businesses of the group. This year, the company targeted to open a total of five malls, to bring their total store count in the country to 65.

Mr. Ong said they are opening SM Tuguegarao this week, making it the fifth mall to be opened this year. With around three more months before the year ends, he said they are ramping up construction for a mall in Batangas in order to open another mall.

Should the company open SM Lemery before year end, this would bring them nine stores closer to their target of 75 stores in 2018.

SM Prime delivered a net income of P14.39 billion in the first half of 2017, 14% year on year on the back of more higher contributions from its provincial operations which pushed revenues 10% higher to P43.25 billion during the period.