The reinvention of the Philippine mall

With more than 70% of the country’s economy generated in household consumption, many consider the Philippines a consumer-driven economy. This fact is magnified by the nearly 1,000 malls present in the country, which only goes to show the Filipinos’ reverence for shopping and dining out as something they do to relax and can’t live without. For decades, malls in the Philippines have been a signifier of progress in the area it is built, while providing a social hub and refuge from the country’s scorching heat.

These traditional malls that were once defined primarily by department stores, fashion boutiques, and food courts, however, are slowly being phased out by developers in favor of multi-functional commercial hubs.

“A traditional mall is primarily retail- or shopping-driven, anchored by supermarkets or department stores, with fashion concepts and some food-and-beverage (F&B) establishments and specialty stores. It is also usually an enclosed box-type format,” Rockwell Land Corp. Vice-President for Retail Development Christine T. Coqueiro said.

“While a multi-functional commercial hub highlights the idea of blending work and play. These are developments that weave together shopping, dining, living and working. Its goal is to give customers a unique experience.”

Even though the pandemic accelerated this development, experts have predicted this phenomenon to happen. While data for Philippine malls are scarce in this area, retailers in the United States are expected to close up to 80,000 stores by 2028, according to financial services firm UBS Global. Perhaps more concerning, data from Capital One Shopping Research predicts that up to 87% large shopping malls will close over the next decade.

Several factors can be attributed to this trend, the most significant of which is the rise of online shopping. For some, online shopping is much more convenient than going to a traditional mall, especially if one is looking for a particularly elusive item. Rather than walking around a mall for hours searching, it’s typically straightforward to find similar products through online stores without the hassle of spending money on gas or stuck navigating large crowds.

Online shopping is slowly integrating the traditional mall’s social features as well. It is true that friends and families could still meet, visit the food court, and see a movie together in traditional malls. But, due to the younger generations’ preference to connect through social media and online games, malls are somehow set aside as a primary place to socialize. Today, social media platforms have become central to digital socializing, and social selling has emerged as a popular online shopping experience.

Another factor for this shift is the increasing cost of operating brick-and-mortar stores compared to e-commerce sites. Conducting business in a brick-and-mortar store comes with significantly higher expenses, including rent, utilities, staffing, and day-to-day maintenance. Thus, the rising costs of operating physical retail spaces are prompting many brands to abandon malls and shift toward e-commerce platforms instead.

This has pushed malls to redefine themselves into commercial spaces or mixed-used developments that meet diverse needs of the market.

“We have already started to veer away from the very traditional box-typed mall formats already,” Ms. Coqueiro explained. “With stiff competition, there’s a need to get creative and set ourselves apart from the rest. While it was the pandemic that accelerated e-commerce, its end is what drove more experience-driven shopping concepts — thus giving rise to more multi-functional commercial hubs. A great example of this would be The Proscenium which is home to an office building, a performing arts theater, residential units, a fashion school and restaurants and bars. The area feels alive and vibrant from the wee hours of the morning until late in the evening.”

Due to these factors, mall owners are pursuing strategies to evolve along with the retail environment, according to a study conducted by the International Economic Development Council (IEDC). Traditional malls still have strong fundamentals that make them appealing to developers, such as their locations in mature markets, minimal direct competition, and access to robust regional transportation networks, including state and local highways.

Ms. Coqueiro also added that the focus, format and key performance indicators of the two concepts are completely different, as they have varied purposes. Malls are primarily focused on revenue and traffic, while commercial hubs are more experience-driven.

“[Mixed-use developments] are great for retail/F&B establishments because with office employees and residents as the immediate catchment, there is a captive market. And it is a market that usually has a strong affinity for the retail and the area as a whole since there is that feeling of ownership and belonging. Having the three elements present — live, work, and play — contributes to the profitability of this format,” she expounded.

This distinction in focus and purpose highlights the growing emphasis on experience-driven environments, setting the stage for a deeper look at how these spaces prioritize lifestyle over mere transactions.

“It’s all about the unique lifestyle experience that these spaces bring to the customers, rather than the more transactional environment that a traditional mall format offers,” Ms. Coqueiro said.

In addition, IEDC’s analysis of nearly 400 malls that have closed since 1980 has found that none have ever reopened in their original form. Instead, developers have been forced to rethink and repurpose these massive properties. Nearly a third were renovated and comprehensively re-tenanted, though with mixed results. Around 18% were demolished and replaced with new retail formats, most commonly big-box power centers. Another 11% were integrated with other uses to improve occupancy levels, essentially making them mixed-use developments.

“One of the biggest challenges is to make sure that you know exactly what your immediate market wants so that all elements that you put in the commercial hub will thrive and feed off each other, creating that energetic and engaged environment,” Ms. Coqueiro commented.

As developers continue to reimagine these spaces rather than abandon them altogether, the question now shifts from whether traditional malls will survive to how they will adapt within an increasingly experience-driven retail landscape.

“I don’t think traditional malls will completely disappear, especially in the Philippines where we have a strong mall culture. However, the malls will definitely evolve to incorporate spaces or pockets that encourage the same social environment that commercial hubs offer,” Ms. Coqueiro concluded.

Source: Business World

ADB expects PHL household spending to improve in 2026

The Asian Development Bank (ADB) said household consumption in the Philippines is likely to rebound in 2026 on the back of easing inflation and interest rates, after a corruption scandal and adverse weather dampened spending in recent months.

However, analysts warned that depending on tax relief to spur consumption could undermine fiscal consolidation efforts.

ADB Country Director for the Philippines Andrew Jeffries said household final consumption expenditure, which accounts for over 70% of the economy, is expected to “strengthen in 2026 amid low inflation and accommodative monetary policy.”

“More broadly, policies need to focus on raising incomes and reducing vulnerability,” he said.

Mr. Jeffries said these measures should include expanding higher‑quality employment, boosting productivity through skills upgrading, and targeted social protection for vulnerable households.

This comes as private consumption growth moderated in the third quarter of 2025, particularly discretionary spending on recreation, hotels and restaurants, partly due to weather‑related disruptions, he said.

Data from the Philippine Statistics Authority (PSA) showed household final consumption expenditure slowed to 4.1% in the third quarter from 5.2% a year ago.

This was the slowest since the 4.8% contraction in the first quarter of 2021. Excluding pandemic years, it was the slowest growth in private spending since the 2.6% increase in the third quarter of 2010.

The PSA will release the fourth-quarter and annual 2025 preliminary gross domestic product (GDP) data, including household consumption, on Jan. 29.

Despite the slower growth in the third quarter, the ADB said spending on essentials, particularly food, remained resilient, supported by low inflation.

Inflation picked up to 1.8% in December from 1.5% in November. This brought the average to 1.7% in 2025.

For 2026, the central bank sees inflation accelerating to 3.2%, but still within the 2-4% target band.

The Bangko Sentral ng Pilipinas (BSP) has so far delivered a total of 200 bps in cuts since August 2024, after it lowered its policy rate by 25 bps to an over three-year low of 4.5% at its Dec. 11 meeting, amid subdued inflation and sluggish growth.

The Monetary Board is scheduled to hold six regular policy meetings in 2026, with the first one set on Feb. 19.

TAX RELIEF?

To spur household demand and ease public concerns over flood control issues, a lawmaker had proposed giving tax relief to Filipinos, but analysts were divided, saying the measure could lift spending but risk undermining fiscal consolidation.

Senator Erwin T. Tulfo filed a bill in the Senate in October to provide a one-time, one-month income tax holiday for individual taxpayers receiving compensation income, effective on the first payroll month immediately following the bill’s approval.

Senate Bill No. 1446, or the One-Month Tax Holiday bill, remains pending at the committee level.

“A tax relief will only delay fiscal consolidation,” Foundation for Economic Freedom President Calixto V. Chikiamco said.

The Marcos administration aims to bring the deficit down to P1.56 trillion, or 5.5% of GDP, in 2025, and eventually to P1.55 trillion, or 4.3% of GDP, in 2028.

Mr. Chikiamco noted that many factors influence consumer spending, such as unemployment, inflation, and wage growth.

“Depreciation of the peso will increase OFW (overseas Filipino worker) incomes and spur consumer spending without decreasing government revenues,” he added.

The peso has breached the P59-a-dollar mark several times since November and sank to a record low of P59.22 on Dec. 9.

Meanwhile, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., argued that tax relief can boost private consumption, but the program has to be “smart and targeted.”

“Tax relief can help revive spending, especially after a year of high prices and tight budgets,” he said.

“Focus on essentials like VAT (value-added tax) breaks on food and utilities, and give relief to lower- and middle-income families who are more likely to spend,” Mr. Ravelas added.

However, he said tax relief must be “time-bound,” and paired with job creation and price stability, so people feel confident to open their wallets.

“The problem on spending is due to the uncertain environment due to ‘floodgate,’ the government should fix its trust issues so confidence will come back,” Mr. Ravelas said, referring to the flood control mess.

Meanwhile, the ADB’s Mr. Jeffries said improving VAT efficiency and sustaining gains in tax administration through digitalization are key to raising government revenue.

“The proposed tax on single-use plastic bags is a notable measure, serving both revenue and environmental objectives by helping address plastic and solid-waste challenges,” he said.

BIR Commissioner Charlito Martin R. Mendoza earlier said the proposed tax measure is projected to generate between P6 billion and P10 billion annually, “depending on the rate and coverage.”

“Beyond taxation, sustained improvements in expenditure efficiency and public financial management are crucial, particularly to strengthen investment planning, project execution, and governance,” Mr. Jeffries said.

Source: Business World

Christmas cheer still propels consumer spending

‘Tis the season to be jolly— and for many Filipinos, it is the prime period to spend, too.

New data from international payments provider Visa show that card transactions by Filipinos rise steadily every December, showing how the Christmas season continues to drive consumer activity in the Philippines.

However, this spending surge plays out differently depending on where Filipinos choose to spend their holidays.

For those staying in the country, spending peaks around Dec. 23, a period Visa describes as the height of the “holiday rush in malls and commercial districts” as shoppers scramble to make last-minute gift purchases ahead of family gatherings.

By contrast, Filipinos traveling overseas tend to open their wallets after Christmas. Their spending peaks on Dec. 29, reflecting “continued leisure and travel-related purchases during overseas vacations,” before tapering off toward the New Year.

Overall, Filipinos abroad register a higher spending peak than those who remain at home. Interestingly, spending drops sharply on Christmas Day itself for both groups, before climbing again in the days between Christmas and New Year.

Visa says the data points to the enduring value of Christmas, whether celebrated at home or abroad.

“Christmas brings people together and our data [underscore] the holidays’ enduring sociocultural and economic significance to the country,” says Jeffrey Navarro, country manager at Visa Philippines.

Online holiday shopping

As e-commerce continues to expand, a growing share of holiday spending is also moving online, according to data from Lazada.

Electronics sales during its 12.12 sale surged by as much as 1,100 percent compared with regular days, making the category the top seller. The spike reflects how “middle-class households are increasingly turning to e-commerce to improve their home environments,” Lazada says.

Branded goods emerged as winners during the sale, as products at LazMall recorded some of the strongest sales during the campaign. Samsung, Dyson, JBL Nike, POCO, Colgate, UFC, BLK Cosmetics and DDPA were among the top-performing brands.

This trend, Lazada says, suggests that Filipino shoppers are becoming more deliberate, increasingly gravitating toward globally trusted brands even in the digital marketplace that’s crowded with low-cost, third-party alternatives.

Foreigners join spending rush

Foreign visitors in the Philippines also contribute to the holiday spending boom, according to Visa data.

Inbound card payments made by foreign tourists also surge during the Yuletide season, with visitors from the United States leading the bunch, followed by those from Taiwan, Japan, South Korea and Singapore.

Much of this spending is concentrated in the buzzing city of Makati, followed by Parañaque, Cebu, Angeles and Davao.

Spending preferences also vary by nationality. Visitors from the United States, South Korea. Singapore, Australia and Hong Kong allocate most of their spending on lodging, while Taiwanese and Japanese tourists spend more on entertainment.

Indian travelers, meanwhile, spend the largest amount on education and government-related payments. Visitors from Canada and the United States prioritize spending on groceries and food during the holidays.

Source: Inquirer