Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting to read:%0A%0A {0} %0A%0A {1}

Brick-and-mortar retail faces headwinds from the pandemic-induced global economic downturn

Claro Cordero Jr. • 28/01/2022
New foreign brand entries subdued while retail closures accelerated.

The last two years have challenged the global economy as the COVID-19 pandemic triggered economic recessions after the varying levels of lockdowns restrict both regional and local economic activities. Data from the World Bank revealed that the global economy plummeted by 3.4% in 2020, a reversal from a growth of 2.6% in 2019 and worse than the recorded 1.3% decline in 2008, during the Great Recession era. Not even the major economies were spared from the crisis with contractions recorded in the United Kingdom and the United States at 9.8% and 3.5% in 2020, respectively. 

The coronavirus impact in the Philippines halted its long-standing economic robustness with its imposition of one of the world’s longest and strictest lockdown period. The country’s Gross Domestic Product (GDP) year-on-year (YoY) growth entered the negative territory in Q1 2020, the steepest decline since Q4 1998, and it stayed there for five consecutive quarters before finally breaking out of the pandemic-induced recession in Q2 2021. For the full-year 2020, the economy contracted by 9.4% – the steepest in Asia – whilst the gradual easing of restrictions beginning in the latter part of 2020 helped boosted economic growth to 12% YoY and 7.1% YoY in Q2 2021 and Q3 2021, respectively.

As for the retail segment in the Philippines, more establishments had since been allowed to resume operations, as compared to the earlier periods of community quarantine when only the essential establishments had been allowed to operate. While seasonal conditions helped improved the average footfall levels in Q4 2021, the retail situation remains challenging as overall footfall in the major developments stays below half of the pre-pandemic level and as consumer spending remains tamed amidst the burgeoning unemployment rates. Overall, however, the prospects remain hopeful with the ramped-up level of the COVID-19 immunization rate.

The latest issue of Cushman & Wakefield’s How Global Brands Are Shaping the Metro Manila Retailer Landscape, a follow-up to our 2019 report, will examine how the ongoing pandemic has altered the international retailer landscape in the Philippines.

As the report probes how the global health crisis has reshaped the Metro Manila retailer landscape and the global brands that drive it, we seek to provide relevant information that will assist stakeholders to reimagine shopping and retailing in the aftermath of COVID-19.

Key highlights of the report:

1) The number of new foreign brands declines as the pandemic lingers

The difficult retail environment, along with the poor performance of parent companies globally, repressed the entry of new foreign retailers in Metro Manila. For the years 2019 and 2020, the number of new foreign retailers dropped to only 49 brands, 29% below the recorded 69 foreign brand entries from 2017 to 2018. Between January to November of 2021, only 10 foreign brands were added, bringing the total new international retailers in the past two years and 11 months to just 59 brands.

Metro Manila Retailer Landscape 1
2) Foreign retailers with Food and Beverage (F&B) concept remain the fastest “comers and goers” in the local retail scene

While more than 80% of the observed closures of international retailers in the last 2 years and 11 months are those with Food and Beverage (F&B) concept, the segment continues to dominate the international retailer landscape as it composes 61% of the new brand entries between 2019 and 2020, as compared to 62% between 2017 and 2018. The other bulk of new brands is from the Clothing and Apparel segment which make up 16% of the total new retail types over the past two years.

Metro Manila Retailer Landscape 2
3) Bulk on foreign retailers gravitate towards the Quezon City and Taguig City

New foreign brand entries were concentrated in the key shopping districts in the cities of Taguig (25%), Quezon (19%), Mandaluyong (17%), Pasay (14%), and Makati (12%). Among those that opened their first branch in Taguig City include The Coffee Academics, COS, and Jordan Manila, the latter of which occupies a massive 4,500 sq.m of retail space. Quezon City, which has the largest supply of existing retail space, attracted brands such as Pazzion, MOS Burger, and Tommy Hilfiger - The Watch Store. Mandaluyong City has become the location of choice to the first standalone store of Champion and the Swedish fashion brand Monki. In the SM Mall of Asia Complex in Pasay City, MCM opened its first Philippine store and the highly anticipated opening of IKEA happened in Q4 2021, while brands such Aesop and Sukiya opened in Makati City.

Quezon City and Taguig City are seen to continue to attract the bulk of international retailers in the future with the incessant shopping mall expansions in those areas, in addition to the increased business activities in their major business districts that fuel retail vibrancy.

Metro manila Landscape 3
Claro Cordero, Director and Head of Research, Consulting & Advisory Services at Cushman & Wakefield, said, “A couple of years back, online shopping plays in the background of brick-and-mortar stores as consumers in the Philippines give greater preference to traditional stores as they value the product experience that physical stores offer. The recent pandemic served as a trigger point for e-commerce to finally take off as it forced many non-essential retailers to temporarily close physical stores and as they take the pressure from reduced footfall when consumers stayed at home.

Also, while the majority in the retail industry are faced with a decline in sales, several have made gains and emerged as the big winners despite the pandemic. Aside from the strong growth in non-discretionary retail, sales in home improvements and home hobby interests such as pet shops and home garden stores also registered unanticipated growth.

Among the key trends that will make huge impacts in the Philippine retail scene are the rise of concept stores and the integration of both in-store and online presence as a way to weather the impacts of the health crisis and support retail sustainability moving forward.”

Mr. Cordero added, “The integration of both the brick-and-mortar stores and online channels will have longer-term implications in the Philippine retail market as the shift in consumer behavior is anticipated to persist. The resultant boom in e-commerce has driven the demand for warehousing, logistics and supply chain solutions. Some idle spaces in retail developments located in close proximity to high quality infrastructure have been converted for warehousing solutions to fulfill last mile delivery commitments due to the growth in e-commerce activity.”

“The Philippine retail scene is seen to evolve to be a hybrid of offline and online shopping with physical stores being complemented by online platforms. These factors, along with more relaxed regulations with the aim of making the country more attractive to foreign investment, should continue to drive the growth of foreign brands as they maintain a massive share of the Philippine retailer landscape”, Mr. Cordero further mentioned.

Download a copy of the How Global Brands Are Shaping the Metro Manila Retailer Landscape 2021.External Link

Related News

Walk for Autism.jpg
Cushman & Wakefield Champions Autism Acceptance and Calls for Industry Wide Inclusion

Employees from global real estate services leader Cushman & Wakefield are stepping up and joining thousands of Australians walking 7k steps a day during May, to raise understanding and acceptance for Autistic individuals, particularly the 70 percent who experience mental health issues.

Jess Freeman • 27/05/2024

Catch 22 (image)
Asia Pacific Economy Forecast to Return to World-Leading Growth in 2022, Maintaining into 2023

The Asia Pacific economy is set to rebound in 2022 and regain top position in the second half of the year with an expected 4.5% real average annual GDP, according to Cushman & Wakefield’s latest report titled Catch ’22 - Asia Pacific Commercial Real Estate Outlook 2022.

Mandy Qian • 08/12/2021

China's 14th Five-Year Plan (image)
Cushman & Wakefield Launches its THINK-IN Report 2021 — China’s 14th Five-Year Plan — What’s Next for Real Estate?

Cushman & Wakefield, a leading global real estate services firm, today released its THINK-IN report 2021 - China’s 14th Five-Year Plan - What’s Next For Real Estate.

Mandy Qian • 21/10/2021

Finance Sector (image)
The Finance Sector — Reforms and Fintech to Propel Sector Demand for Leased Office Space in China

Cushman & Wakefield released its report titled The Finance Sector – Reforms and fintech to propel sector demand for leased office space in China.

Mandy Qian • 15/10/2021

Euromoney award (image)
Cushman & Wakefield Again Named Top Real Estate Advisor and Consultant Globally and in China by Euromoney

In the 2021 survey the firm was awarded a clean sweep of wins in China, Asia Pacific, and worldwide, in the four categories of Overall Agency, Valuation, Letting / Sales, and Research.

Mandy Qian • 16/09/2021

data center
Hong Kong's Data Center Market Stands Firm

While the pandemic and geopolitical tensions have impeded the development of data centers in multiple markets around the world, Hong Kong's data center market still stands firm.


Nick Seaton and Dawn Koo
Cushman & Wakefield Promotes Two Senior Leaders in its Global Occupier Services Business in Asia Pacific

Nick Seaton and Dawn Koo’s promotions reinforce the growth of the firm’s integrated portfolio management services.


Outlook 2021 Retail
China Retail Supply / Demand 2021 — Retail Dynamism Drives the Market

Cushman & Wakefield, a leading global real estate services firm, recently released its report China Retail Supply/Demand 2021.


investment card
Hong Kong CRE Investment Activity Back on the Rise, Half-Year Transaction Volume up by 97% y-o-y

As the local pandemic situation in Hong Kong calms and the economy recovers, local and institutional investors with abundant capital have turned active and looked for investment opportunities in the market, resulting in an upsurge in commercial real estate (CRE) transaction volume in 1H21. 


Government Work Report to Promote the Steady Development of Real Estate Market
Government Work Report to Promote the Steady Development of Real Estate Market

Cushman & Wakefield Releases Interpretation of Real Estate Policies in the 2021 China Government Work Report


Shanghai and Beijing Place Among Global Data Center Leaders
With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Privacy & Cookies.
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All