No retail apocalypse in sight: Why PHL malls are thriving
WORLD -RENOWNED retail expert Paco Underhill likes to avoid using the phrase “retail apocalypse” when talking about the recent shutdown of major retail stores in the United States.
With more than three decades in the retail industry, Mr. Underhill sees the phenomenon more as an evolution of how companies cope with the demands of society. And where most US companies seem to have failed, Philippine firms are seen to be moving toward the right path.
“It isn’t just the growth of the mall, it should be the growth of the all, which is when the mall is connected to housing, and work, and play…. And we’re seeing a new generation of consumers where they just want to live work and play in the same place,” Mr. Underhill said in an interview in Pasay City last week.
The so-called retail apocalypse refers to the closure of brick and mortar stores in North America due to several factors such as bankruptcy, oversaturation of malls, ballooning rents, and the rise of online shopping. Companies that have declared bankruptcy include retail giant Sears, Nine West, and Toys “R” Us, among others.
“What we’re seeing in the US is a number of very prominent firms whose evolution was just too slow. The challenge is can the merchant community evolve along with their customers,” Mr. Underhill explained. “I don’t think of it as an apocalypse. I think of it as a reflection of social change.”
The author of What Women Want noted that this is not the case for the Philippines, as developers have identified what a modern shopping mall should include. Not just a big box filled with different products, Philippine malls are typically located within a complex catering to the live-workplay lifestyle.
“What we see is a more enlightened view so that the modern shopping mall may have a hotel, an office building, and library, a church, doctor’s offices, a daycare center, a playground, and maybe even a sports stadium, all in the same place,” he said.
SECURITY
Mr. Underhill also described how malls in emerging markets like the Philippines offer safety, cleanliness, and a controlled climate for shoppers.
Whereas a customer might be worried at a street in downtown Metro Manila, malls offer a sense of safety with its boxed walls and security cameras.
“Second is that it’s clean, there’s a level of hygiene that makes sense to you. And the third is that it’s climate controlled. It is a place that is secure, clean, and pleasant to be in. There are no exhaust fumes and the roar of motorcycles,” he enumerated.
As for the concerns that online shopping may reign supreme in the years to come, Mr. Underhill said the sensory aspect customers experience when coming to physical stores will remain to be an advantage.
“Part of what we’re watching is a shift in process. The physical store allows me to touch, taste, feel — something that I cannot do online. The advantages for online is if I’m buying the same things over and over again, there’s savings in terms of time and money,” he explained.
Mr. Underhill takes his expertise in the retail industry from serving clients in 46 countries and advising them with what works and what doesn’t work in their stores. His work spans across all retail segments — from convenience stores and gasoline stations to luxury goods and technology platforms.
His company called Envirosell deploys about a hundred people every day to observe the goings on of stores in different settings, whether it be near a bank, a sports stadium, doctor's office or whatnot. Here, they record what customers do once they enter a store and how their shopping routines are, which is then passed on to a company’s marketing, graphics, or design departments where changes can be made.
“They may look at when you look at the door do you slow down. Do you turn right or left, at what point do you stop, do you touch it, do you pick it up, at what point in the process do you look at the price,” Mr. Underhill said.
While these actions may seem small for the consumer, Mr. Underhill said they actually play a big part on how retailers can better arrange their stores so that shoppers would spend more.
“It is that tactical execution that is critical in order to go from losing to winning,” he said.