WHY SM HAS NO MALLS IN ILOCOS By Philip Jr Lustre We had the opportunity to have some freewheeling discussions with Annie Garcia, president of SM Supermalls inc., and her business executives in the last fellowship meeting of the Thursday Club. So many issues had come out in our brief conversation. The following summarizes our discussions: POINT ONE: SM North City, the first to be built among the existing 50 local and 10 overseas malls, remains the biggest income earner for SM Supermalls, beating Megamall and Mall of Asia (MoA), the two largest SM mall complexes. Mr. Bien Mateo, one of the vice presidents for operations, conceded that it could be surprising because Megamall and MoA are crowd drawers because of their gigantic sizes. But since SM North is the original mall (it was built 30 years ago), it still draws big crowds. In fact, the rent income (rent in SM North City is bigger than the other malls) has increased over the years unlike the two other malls. The two other malls have the potentials to overtake SM North City, but that remains to be seen, Mr. Bien said. Meanwhile, SM North City is slated to expand, as it plans to put a new structure over the space previously occupied by the Supermall building. Also, SM plans to develop the adjacent two hectare land there. It was also astonishing, according to Mr. Bien, for SM North City to remain its top income earner despite the stiff competition of the Ayala-owned Trinoma mall situated just in front of SM North. A factor could be the fact that the MRT-3 starts right on the SM North’s doorstep. The question now is the move to transfer the MRT-3 North Avenue station in front of Trinoma. But this is legal issue, which is already submitted to the court for litigation. POINT TWO: SM Supermalls Inc. president Annie Garcia does not believe that the Philippines is “overmalled,” or has an excess of malls. On the contrary, the demand for more malls rises as the national economy improves. A higher growth rate is translated into higher sales for the malls. Hence, the demand exists and SM has to respond to the demand. Answering my query, Ms. Annie said SM Supermalls keeps on building new malls, but the move is to get out of Metro Manila. Hence, the new malls are located outside of the metropolis. The mall in Cabanatuan City, Nueva Ecija, is now undergoing construction. It is expected to be opened by May next year. In fact, before Ms. Annie came over to the fellowship night, she went to Cabanatuan City for an update on the construction of the new mall there. In response to my question if the different SM malls are competing against each instead of going after their rivals like Robinson’s, Puregold, and other malls, Ms. Annie admitted it is something bound to happen, but they do not begrudge the various SM malls from competing against each other because they still have the market leadership. As example, Ms. Annie cited SM Marikina, which is about 4.5 kilometers away from SM Masinag in Antipolo, SM Taytay, and SM Angono. The customers of SM Marikina, who could not get there, could go to SM Masinag; the customers, who could not go to SM Masinag, could go to SM Taytay and so forth. POINT THREE: According to Mr. Bien, an SM mall built on an area of four hectares has an average construction cost of only P1 billion. The average construction cost includes everything – escalators and elevators, multistory parking buildings, or parking spaces, the mall proper that houses those stalls, roads, catwalks, and fences, among others. When they learned that the Makati City parking building has reached a cost of over P2.3 billion, Mr. Bien admitted that they could not help but wonder and laugh at its escalating cost. Mr Bien could not believe that its cost could reach that staggering level because their experience at SM says otherwise. But Mr. Bien did not talk about politics, as his discussions were limited to mere comparative figures on construction cost. POINT FOUR: Veteran broadcast journalist Rolly “Lacay” Gonzalo, an Ilocano himself, observed that SM Supermalls has yet to build a mall in the Ilocos Region (Ilocos Norte, Ilocos Sur, Abra and La Union) and raised the rhetorical question: “Is it because the Ilocanos are reputedly ‘kuripot’ (stingy, or miserly)?” Mr. Bien was first to give his rejoinder saying that he begged to disagree with Lacay’s observation. The Ilocanos could be thrifty but certainly not miserly or stingy, he said. These are two different things, he said. Ilocanos would definitely save their money for the rainy days, so to speak, but it the end, they would go to malls to spend it wisely on the things they actually need, Mr. Bien said. Ms. Annie gave a differing view. Putting up a mall in a given area, even if it has the demand and potentials, depends largely on the availability of tracts of land, where the conglomerate could put up the structure. She said SM needs at least four hectares of land to develop; any tract of land less of that size would not be considered for development. That has been the rule of the thumb. Hence, any plan to develop a mall in the Ilocos region would depend on available tracts of land with a size of at least four hectares. It’s not a function of culture, she clarified. Like Mr. Bien, Ms. Annie does not see anything wrong in the Ilocanos’ culture of thrift. In the end, they would go to a mall to spend their savings, she said with an air of authority.
Posted on: Sat, 29 Nov 2014 13:56:20 +0000
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