A year earlier, at the onset of the coronavirus disease 2019 (Covid-19) pandemic, the overall picture for global financial markets looked grim. Economies were left reeling from the impacts of the pandemic, with various industries recording significant decline in revenues. Several disruptions in supply chain processes as well as the imperative to prioritize a new work setup only added salt to the wound already sustained by businesses which struggled to stay afloat during the new normal.
With the introduction of mass vaccination programs in different countries across the globe, the market outlook began to look a bit rosy. The picture gradually became one depicting adaptability and resilience. The priority now for retail companies is not only to address weaknesses but capitalize on their strengths.
In the Philippines, apart from the services sector, the retail industry has taken a massive beating from the effects of the pandemic. A year ago, in March, mall operators recorded a 10-percent decline in their sales while fashion retailers in the country saw sales slide by 20 percent, according to a survey by the Philippine Retail Association. The retail industry has been in a major slump for more than two years and the onslaught of the pandemic only added to the downturn.
The pandemic has not only stirred a decrease in revenues. Earlier projections were made stating that the vacancy rate in the retail sector in Metro Manila is projected to have reached 14 percent last year, the same rate recorded during the Asian Financial Crisis according to property consulting firm Colliers International Philippines. The high vacancy rate is seen to push more retail spaces in Manila to be converted to co-working and data centers this year.
The overall landscape in retail across the country is now anticipated to deviate from the norm – smaller retail spaces within communities will proliferate while property experts look at more innovations in the conversion of mall spaces.
Cultivating a new strategy
This year is seen to be a year of ‘soft’ recovery for the retail sector. While physical stores will not re-open their doors completely in the coming months, there is still hope that through measures integrating sustainability and building resiliency, there will indeed be recovery. This recovery is seen to start as businesses strengthen their omni-channel sales approach that can provide integrated customer service. This strategy can be used to adapt to changing consumer behavior, as they shift to a mix of online and in-store purchases.
Having an omni-channel strategy is clearly not enough. Aside from boosting online presence, there must be a ramp-up in pickup and delivery services. Retailers should back these services with a more open mindset as in the end, the key is in listening to customers’ needs and wants and catering to their demands through viable channels. Shopping centers, for example, will not go out of style anytime soon. However, these facilities will have to be more inventive in their operations to keep up with the effects of the pandemic.
Fostering resiliency and sustainability
When the government imposed lockdowns in various key areas in the country, retailers were left at a slump in thinking of innovative ways to operate. The situation may have spelled well for e-commerce businesses but for traditional retailers, the situation had been difficult. Pre-pandemic, e-commerce spending made up 2 percent of overall total retail spending but halfway through 2020, more Filipinos were recorded to have made e-commerce purchases.
For retail businesses to stay afloat, beefing up resiliency and sustainability measures is of value. Drive-through retail options can be improved, as well as personal shopper services – measures that form part of a bigger operational resiliency framework that can help improve businesses.
Recent reports show that the new mindset that consumers have cultivated due to the pandemic, including doing their purchases online, will certainly subsist even as government-imposed restrictions ease. The trick then for retail companies is to continue improving their e-commerce and omni-channel strategies in anticipation of more changes in consumer demand.
The new normal may have stirred up various changes in the way retail businesses operate but the future scenario need not be as grim as we expect. In the end, the ultimate saving grace must come from retailers’ initiatives. Retail business leaders must go beyond the unexpected and invest on innovative product developments to meet consumer demands and thrive post-pandemic.
JJ Vicedo is a Senior Manager of the Audit and Assurance Division of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory and outsourcing firms in the Philippines with 22 Partners and more than 900 staff members. We’d like to hear from you! Tweet us: @GrantThorntonPH, like us on Facebook: P&A Grant Thornton, and email your comments to firstname.lastname@example.org or email@example.com. For more information, visit our website: www.grantthornton.com.ph
As published in The Manila Times, dated 24 March 2021