Upside and downside of craze

The rise of malls in Cebu City and the province has its pluses and minuses.

For one, it benefits consumers, said young professional Francis Infiesto.

“Prices of goods will go down because these malls and supermarkets are competing to get customers. Customers have more choices and will definitely choose those stores which offer affordable prices,” said Infiesto, a writer for a Cebu-based English-as-second-language school.

But it is not without a price.

Threat to small businesses

The intense competition might just kill off small businesses in the old commercial district in the downtown area, said Fernando Fajardo, an economics professor at University of San Carlos.

“Businesses in downtown are not as profitable as they used to be. The entry of more malls will kill these businesses unless they do something about it,” said Fajardo, an executive director of Cebu Business Club.

But they will not go down without a fight.

They have improved on the looks and services in order to compete.

In the case of Colonnade Mall on Colon Street, the management has invested P25 million for renovation, said Valeriano Avila, vice president of Colon Heritage Realty Corp. which operates Colonnade Mall.

Colonnade Mall was put up in the early ’80s but the building, which houses Oriente Theater, was put up in 1920. The location itself is a historical landmark, said Avila.

“People living near the area know that Colonnade Supermarket has one of the lowest prices in the city. They need not go to bigger malls or supermarkets to buy the same goods,” said Avila.

Like Escolta

He likened Colon Street to Manila’s Avenida and Escolta streets.

“When (the bulk of) businesses moved to Makati, it didn’t mean that businesses in Manila stopped. People still go to Avenida and Escolta. It’s the same thing with Cebu because people know they can buy goods at lower prices at Colon,” he said.

Mall developers are moving closer to the market to fend off competition, a strategy Avila saw in SM’s decision to open a mall in Consolacion town and the Gaisanos’ expansion in other towns and component cities.

“Why did they (SM) build a mall in Consolacion? They want people to go to SM because if they go to (Cebu) city, they might visit Ayala (Center Cebu),” he said.

In terms of entertainment, Avila acknowledged that the mall’s theaters were losing.

“The cost of operating is increasing but we’re keeping it for heritage reasons,” Avila told the Inquirer.

Renovation

Like Colonnade Mall, Prince Warehouse Club Inc. has invested millions of pesos in renovating its stores.

Its branch on M.C. Briones Street across from the Cebu City Hall underwent a facelift and reopened last September. It has transformed into a department store and is now called Prince City Hall Department Store and Supermarket.

Prince president Robert Go said the evolution was a natural progression for the business as it moved from a warehouse model to a department store that caters to the varied needs of customers.

The first Prince store was opened in 1990.

There are now eight Prince stores in Cebu province. The business has also expanded to Maasin in Southern Leyte, Baybay in Leyte and Naval in Biliran.

“People always look for fresher concepts. Something new to the eye. For a retail business, we need to keep ourselves fresh, new and clean. People won’t go inside shabby-looking shops,” said Go.

The Prince chain targets the masses and even this market demands better service from establishments. Go said the store near city hall caters to churchgoers of Basilica Minore del Sto. Niño, government employees and office staff.

After renovating the store, Go said the company would refurbish the warehouse store at the North Reclamation Area.

Room for more

With malls and department stores going to the municipalities, is there still room for more?

“We need more. Malls provide the alternative to parks and playgrounds which we do not have here,” said Harry Pow, chief executive officer of H.S. Pow Construction and Development Corp. and development manager of J Centre, an integrated development that is home to the newly launched J Mall on A.S. Fortuna Street in Mandaue City.

Unlike Singapore, Cebu does not have public parks where people go to after office hours, according to Pow.

The existing ones like Plaza Independencia and Fuente Osmeña Circle are either too far from the main commercial district or are not clean or safe.

Parks, playgrounds

“Cebu is a growing economy, a growing city but sadly we lack open parks and playgrounds where people can spend time to relax and unwind. There is not much place to go here in the city. The malls provide the alternative,” Pow said.

Fajardo said that unlike Luzon where Metro Manila residents can drive to Tagaytay to relax, Cebu City residents do not have a Tagaytay where the needs of all family members are addressed.

Rex Villavelez, a Southwestern University researcher, said developers may want to consider investing in parks and playgrounds.

There is a part of the population that wants to be in a park to read a book or spend a quiet moment with nature, according to Villavelez.

Dr. Brian To, a senior fellow at The Wharton School of University of Pennsylvania, said the Cebu market was still open for more product and facility differentiation.

Fresh concept

“Right now, there is not much fresh and new entrants in retail design. It has always been the same players—the Sys, the Ayalas, the Gaisanos. There are assorted strip malls but if you talk about new retail concepts, there is none,” said To, a business professor and management adviser for over 25 years to Fortune 500 corporations.

The Philippines in general still doesn’t have developments like Hong Kong’s Festival Walk, a multilevel dining and leisure complex that integrates all lifestyle concepts in one vicinity, To said.

With inbound tourism in Cebu still growing, he said developers and owners should be able to provide service differentiation in retail development.

The growth would continue, To said, with the middle class serving as the main market. The challenge for developers is for them to capture what the majority of the market wants and needs. Cris Evert B. Lato