In 2017, we released the second issue of How Global Brands Are Shaping the Metro Manila Retailer Landscape report. Confronted with the ever-evolving market trends and challenges that continuously shape the Philippine retail market, the third issue again examines how the global brands have grown and developed.
The country’s economic growth is largely supported by the growing consumer spending, reinforced by manageable inflation, healthy flow of overseas Filipino remittances, growing IT-BPM/offshore gaming segments, and sustained growth in tourism arrivals. The aforementioned factors also continue to support the vibrant activities of the Philippine retail sector as it remains accommodating towards international retailers.
For 2017 and 2018, there were 68 new global brands that opened in the Philippines, a number that was considerably below the figures recorded between 2015 and 2016, which was at 116 foreign brands. However, while the dwindling numbers can be attributed to the shift in investment strategies of international retailers and weak global expansion, our view of the country’s retailer scene remains positive with 34 additional new foreign brands recorded to have entered the country up to November of 2019.
Majority of the recorded new foreign brands are of mid-tier category with mostly Food and Beverages (F&B) concepts. F&B retailers comprise 63% of the total entries between 2017 and 2018 and 68% in 2019. The Clothing and Apparel segment, which suffered the biggest setback in the series of global store closures has also stagnated in growth in the Philippines, where new brand entries are limited since 2014. As of November 2019, the distributions of total foreign brands by retail type are 43% F&B, 23% Clothing and Apparel, 7% Footwear, and 27% for other retail types.
Brands from Asia, specifically from Japan and Singapore, dominate the Philippines’ foreign retailer scene with the region having 63% share of the total 102 brand entries since 2017. These new international retailers are drawn into Bonifacio Global City (BGC), due to it becoming a main investment destination for several business locators, including foreign-based and multinational companies.
Meanwhile, although the local retail market is still characterized by greater preference towards shopping in brick-and-mortar stores, the growth of the e-commerce industry offers immense opportunities with the growing awareness toward virtual retail and shopping transactions. Moreover, the strong macroeconomic fundamentals are seen to sustain the key demand drivers of the retail sector, which will pave the way for the continued presence of the international retailers in the Philippines.
To read the third issue of the report, download it here.