Strong spending seen, but cautious optimism in 2022

THE retail industry is pinning its hopes on the increased vaccination and election spending to log more robust sales in 2022.

Seasoned retail player Robert Go said coming from a yo-yo performance in 2021 due to hard lockdowns, industry players are hoping sales would experience unhampered growth in this brand-new year.

“Our outlook is optimistic but guarded, since Covid-19 Omicron and other variants might wreak havoc. We expect slow investment to trickle only with the help of election spending,” said Go, spokesman of the Philippine Retail Association-Cebu.

Go noted that while 2022 would be more of a spending year, its progress may not surpass the pre-pandemic 2019 level.

Go said “greater hope” is expected in 2023 when the country will finally achieve herd immunity against Covid-19.

Go said new opportunities are expected to open up this year as a result of social distancing. Delivery will further boost online sales, and hybrid working schemes will continue to stay.

He also foresees growth of market places in every subdivision or integrated community as people embrace the less crowded and more convenient retail experience.

“We will also see more ‘open-air’ dining places opening up as more people prefer outdoor dining areas to indoors because of this pandemic,” he said.

Amid the rosy outlook, Go also warned of difficulties this year. One thing he pointed out is the difficulty to grow at par with the 2019 levels since many industries are still down and the jobless rate is still up.

“Retail will grow, but it will grow slowly to where it was. Let us just hope that this Covid-19 Omicron variant will not cause havoc,” he said.

Market outlook

In its latest market outlook, property research firm Colliers International Philippines sees the delivery of 523,700 square meters of new retail space this year. It also projects rents to recover on the back of increasing vaccinations and a rise in consumer spending.

It also noted that the Filipinos’ growing propensity to shop online is among the top factors that will likely influence physical mall space absorption beyond 2022.

The Department of Trade and Industry projects the number of domestic online businesses to reach 750,000 in 2021 before rising to about one million in 2022.

Because of this, Colliers recommends that retailers expand their e-commerce presence and maximize technological advantages.

Over the next 12 to 24 months, the firm also encourages mall operators to be cautious of new supply and recommends that mall operators be flexible with their space usage by maximizing their space for opening pop-up stores, utilizing available facilities such as activity centers for Covid vaccination drives as well as introducing alternative dining options.