Is online buying starting to make a dent on shopping malls?

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(Part 1 of a two-part article on the changing shopping lifestyle of the modern-day consumer in the Philippines)

Business publications like Forbes and Business Insider in the United States have recently reported that up to 25 percent of shopping malls may close in the next five years, according to a study released by Credit Suisse, a global banking institution.

The study attributed the grim retail industry scenario to the continued onslaught of e-commerce which has been pulling shoppers away from bricks-and-mortar stores.

Long-standing traditional retailers like Macy’s, J.C. Penney and Sears have announced numerous store closings in light of the shift in shoppers’ buying habits to online markets. Highlighting this migration has been the rise of online fashion and apparel retailers, prompting Credit Suisse to predict that the share of apparel sales in the internet will increase from 17 percent today to 35 percent by 2030.

Enjoying double digit growth

In the Philippines, the exodus to online markets has not yet reached alarming proportions—at least not yet. Mall giants such as SM malls and Robinsons are still opening sprawling shopping malls, principally in the countryside. But the high density of malls within Metro Manila appears to be taking its toll because of the high saturation level.

E-commerce experts have taken note that the sales of internet retailers enjoyed double-digit growth as of 2016. This has been fueled by the strong domestic economy coupled by an ever-growing base of internet and mobile users. The Internet and Mobile Marketing Association of the Philippines (IMMAP) has estimated that there were 35 million internet users in 2014, which are projected to grow to 70 million by 2018.

Consumers anywhere in the Philippines are now able to shop through online shops anytime, 24 hours a day and 365 days of the year, while avoiding the inconvenience of commute in traffic. Internet shopping aligns the modern lifestyle of contemporary consumers who prefer on-demand satisfaction of their needs and wants.

Shopping behaviors

So how do today’s networked consumers shop? I surveyed 388 netizens aged 18-60 primarily living in the greater Metro Manila area in 2016 and uncovered some key online shopping and buying behavior of Philippine consumers.

The study has found that as much as 90 percent of all netizens have tried buying in the internet. Moreover, one out of three (32 percebt) netizens consider themselves regular online shoppers. This indicates the extent to which internet buying has spread and taken root within just several years.

True enough, online buying has been fueled by internet access. More than 80 percent of surveyed netizens access the internet daily, and some 10 percent do so at least two to three times a week.

Frequency of online shopping has reached significant levels. More than 26 percent buy at least one product or service every month. A lesser ratio (13 percent) purchase online at least once every other month, while 27 percent have bought at least one product within the last three months. On the other hand, there remains netizens who have not adopted the practice, as 34 percebt have just reported buying only once or less in the last six months.

The empirical study revealed that online shopping has achieved status as a legitimate and substantial marketing channel that cannot be ignored. This explains why many established retailers like Uniqlo and Bench have launched their own online shopping app portals to access untapped or underserved markets.

Buying behavior on-line

Internet shopping portals like Lazada, Zalora and Metrodeals have become household names because of the mind-boggling variety of branded and upstart goods and services they offer to the shopping public. Assortment and choices are evidently important considerations.

The most often purchased product in online markets is clothing and apparel (58 percent), followed by airline tickets (45 percent), food deliveries (41 percent) and hotel accommodations (37 percent). High purchase levels of airline tickets and hotel room reservations (which are complementary) indicates that many Filipinos have become travel bugs, most probably due to the availability of affordable air travel and lodging facilities.

Almost 28 percent of online buyers purchase personal care products (fragrances, beauty products) and 19 percent buy watches and jewelry. Thus, taken together with clothing and apparel, personal-use products as a category is the market leader in terms of incidence of online purchases.

Smartphones and gadgets (13 percent), laptops (18 percent) and personal computers (9 percebt) rank the fourth-most reported category of online purchases. With price of electronics products going down, there is expectation of increasing market share for this category. Purchase incidence of concert tickets (18 percent) take up fifth position in the online totem pole.

Shopping using smartphones

The study likewise revealed that online shopping has been driven by rapidly increasing ownership of the smart phone. More than 8 out of 10 internet consumers reported to shop and make their purchases using their mobile phones.

Marketers, particularly those who have stuck to the brick-and-mortar model for so long, would do well to take heed of the shifting winds of consumer shopping behavior. Virtual stores as a marketing channel have substantially lower investments and operational costs, and open new doors to more markets anywhere around the country.

Dr. Gañac is assistant professorial lecturer in the Ramon Del Rosario College of Business of the De La Salle University. He joined the academe in 2012 after a broad and varied career in corporate communications, corporate marketing, corporate social responsibility and investor relations spanning more than 30 years. He teaches Strategic Marketing, Consumer Behavior, Marketing Research, Public Relations among other subjects under the Marketing Management program of DLSU. He can be reached at [email protected]

The views expressed here are the author’s and do not necessarily reflect the official position of DLSU, its faculty, and its administrators.

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