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Retailers look to recover ‘lost’ sales in 4th quarter

By Revin Mikhael D. Ochave, Reporter

THE COUNTRY’S retail industry is still cautious about its near-term sales outlook, as consumer confidence remains tepid despite the further easing of mobility curbs in Metro Manila.

Roberto S. Claudio, Philippine Retailers Association (PRA) vice chairman, told BusinessWorld in an e-mail interview that retailers are not seeing “revenge spending” yet but expects to recoup lost sales in the upcoming holiday season.

“This Christmas season, (we) will just be happy enough to recover lost sales from the last three quarters. It’s more like a ‘testing the waters recovery’ than a ‘revenge spending.’ Most retailers are just aiming for a breakeven performance at best,” he said.

Revenge shopping refers to a trend first seen in developed countries that have emerged from lockdowns, wherein consumers make up for lost time by spending and going out more.

Colliers Philippines in a recent report said “revenge shopping and dining should anchor mall operations’ rebound.”

Mr. Claudio said full-year retail sales are still likely to be flat, even as Metro Manila is currently under a more relaxed Alert Level 2 and coronavirus disease 2019 (COVID-19) cases have plunged.

“We are not revising our previous projection at this early stage of Alert Level 2 due to uncertainties that are present namely, people and transportation are not at pre-pandemic levels. We are also not ruling out a resurgence of cases which may lead to another lockdown,” Mr. Claudio said.

Metro Manila will remain under Alert Level 2, which allows businesses to increase capacity, until end-November. Shopping malls have seen an increase in foot traffic, as there are no longer age restrictions on individuals allowed to enter.

However, President Rodrigo R. Duterte on Monday evening urged local governments to ban children below 12 years from malls and public spaces to protect them from COVID-19.

Steven T. Cua, Philippine Amalgamated Supermarkets Association president, is hoping revenge spending will make up for the impact of “confusing” changes in health and safety protocols, and quarantine restrictions.

“With the gradual opening of the economy, we pray that consumer confidence will be more stable. Revenge spending for those who can afford will hopefully make up for the slack during this year’s rollercoaster lockdowns and confusing guidelines regarding health and safety protocols,” Mr. Cua said in a mobile phone message.

Jose Ma. “Joey” Concepcion III, presidential adviser on entrepreneurship, told BusinessWorld in a mobile phone interview, that businesses will see a recovery in the last quarter, albeit in varying degrees.

“I think the recovery for the industry is starting now. All of them are starting to recover. But you cannot recover everything you lost over just one quarter. We are now seeing an upward trend in terms of income,” Mr. Concepcion said.

“It will depend on the business owners. Some will have good earnings and recover their losses, while others will be a bit lower. But everybody in the fourth quarter will definitely recover well and get more income so that they can pay their obligations,” he added.

RISKS
PRA’s Mr. Claudio sees a partial recovery of the retail industry by the first semester of 2022, and full recovery by the third quarter of 2022, as long as no new lockdowns will be implemented.

However, the biggest risk to the retail sector’s recovery is the competition from foreign e-commerce giants.

“Our biggest challenge in not so much the popularity of e-commerce in this pandemic time, but the unfair competition that e-commerce has created in the retail business. Foreign sellers in the online marketplaces are not subjected (to) value-added tax and customs duties, thereby putting the store retailers in an unfair situation in that we are subject to these taxes and duties,” Mr. Claudio said.

“We do not mind the competition from e-commerce players for so long as we are subjected to the same government regulations on taxation, tariffs, counterfeits and consumer protections,” he added.

Mr. Cua said supermarkets may recover around mid-2022, citing the increased demand usually seen during election season.

He noted the e-commerce sector may continue to surge if the COVID-19 outbreak persists in the country.

“If the epidemic crisis abates, physical shopping will make a comeback with a vengeance,” Mr. Cua said.

Meanwhile, Mr. Concepcion said the government should only give mobility to vaccinated individuals as long as the pandemic is ongoing.

“The recovery will continue next year as long as we only implement granular lockdowns. We have to trust that the vaccines work,” Mr. Concepcion said.

As of Nov. 14, 31.6 million or 40.93% of adult Filipinos have been fully vaccinated against COVID-19, according to Malacanang.

In the Philippine capital region, 92.12% or 9 million people of the 9.8 million target population have been fully inoculated against COVID-19.

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