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Philippine mall titan quickens shift to China-style mixed retail

SM Investments Corp., the owner of the Philippines’ largest mall operator, is speeding up efforts to develop “omni-channel” options for shoppers as people shift to a mix of online and in-store purchases amid the coronavirus pandemic.

The group is tapping personal shoppers, ramping up delivery and pick-up services, and boosting its online presence, said Steven Tan, president of SM Prime’s mall unit. Last month, the group started operating a virtual mall for Manila residents, which it plans to roll out nationwide soon, he said.

“You have to be present in all channels,” Mr. Tan, 51, said in a virtual interview on Friday. “Retail is all about listening to your customers and moving so fast,” said Mr. Tan.

The group founded by the late Filipino billionaire Henry Sy is adopting the “omni-channel” retailing approach seen in China, where people shop both online and at malls, he said. Although malls need to keep up with changing times, they won’t go out of style, Mr. Tan said.

SM has 75 shopping centers in the Philippines and eight in China. It is opening another in its home country this quarter and about five are planned for next year, he said.

Transactions through social-media channels account for about 11% of sales at SM department stores, Timothy Daniels of SM Investments said at the interview.

“There is no plan to slow down the general retail strategy,” said Mr. Daniels, SM’s investor relations consultant.

Filipinos are returning to malls as virus quarantine curbs ease but shopping habits may have changed, Mr. Tan said. People visiting malls are those purposely buying and not just window shopping, he said, forecasting that by the third quarter of next year, sales of tenants at SM malls will be back at end-2019 levels.

Sales of SM shopping center occupants are at 60% to 70% of pre-pandemic levels, up from about 20% in the early months of Philippines’ reopening in May and June after a two-month lockdown, he said. Foot traffic is about 40% of what it was before the coronavirus. SM plans to gradually restore rents in 2021 after waiving most of the tenant fees this year, Mr. Tan said.

Swedish furniture retailer Ikea will open its store in SM’s Mall of Asia by the third quarter of next year, Mr. Tan said.

SM Group introduced 250 small-format outlets including Alfamart stores this year and plans to open more, Mr. Daniels said. The company’s malls are expanding al fresco dining and lounges to cater for the virus-driven trend toward bigger, open spaces, said Mr. Tan.

Mr. Tan joined the company in 2004 when fashion made up 70%–80% of tenants and restaurants were less than 5%. Food now accounts for 30% of SM mall occupants, services about 15%, and fashion is below 50%. — Bloomberg

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