BUSINESSES are preparing for recovery this year on hopes of a further easing of lockdown restrictions and the rollout of the coronavirus disease 2019 (COVID-19) vaccine, but restoring consumer confidence remains a challenge.
SM Supermalls President Steven Tan said 2021 is expected to be a “year of recovery” after the pandemic battered the retail industry last year.
“Malls are open again but consumer confidence is not yet 100% back to normal. Spending is muted. We are hoping 2021 would be a better year for everyone,” he said at the BusinessWorld Insights online forum on Wednesday.
“The first half would still slowly grow but the second half of the year, when the vaccine comes out, it will slowly go back to normal. We think we will be back to 2019 level by the last quarter of the year,” Mr. Tan said.
Malls were forced to shut down for nearly two months when the government placed Luzon under an enhanced community quarantine (ECQ) in mid-March.
SM Prime Holdings’ rental revenues dropped by nearly half in the first nine months of 2020, due to the mall closures. The listed firm said in a regulatory filing that it waived a total of P17.28 billion in rentals and other charges throughout ECQ.
The strict lockdown restrictions also hurt the fastfood business, which relied mostly on dine-in customers before the pandemic.
“Our business was one of the most impacted business sectors last year and continues (to be impacted) this year. The restrictions and lockdowns as well as age restrictions, prevention of mass gathering are a hindrance to recovering the whole potential of the business,” Golden Arches Development Corp. (GADC) President and Chief Executive Officer Kenneth S. Yang said during the same forum.
GADC, which operates the McDonald’s franchise in the Philippines, expects to see an improvement over last year’s financials as lockdown restrictions are slowly eased and the vaccination program likely to begin in the first half.
“I think with the emergence of the vaccine, this will become helpful and add to consumer confidence to go out. At this time, consumer confidence while improving is still quite low,” Mr. Yang said.
DIGITAL PIVOT
For Mr. Yang, businesses must adapt to how customer behavior changed during the pandemic.
“We have to also modify our businesses, our operations, our channels to satisfy their new expectations,” he said. “If safety is their topmost priority, then you have to have safety solutions so that visits to your restaurant or consumption of your products are reassured.”
Mr. Yang said digital measures are critical for all industries to ensure convenient access for customers.
GADC had already been working on its digital transformation pre-pandemic, which was then accelerated last year.
“What was planned for five years was accelerated all into 2020,” Mr. Yang said, adding that internal operations also had to be connected online for work-from-home measures.
SM Supermalls also had to accelerate the digital transformation. Mr. Tan said SM malls have launched online selling tools and personal shopper assistance services to attract consumers who are stuck at home.
These digital measures mirror the China-style mixed retail method the company is adopting, as SM looks to its counterparts in the region for potential recovery measures.
“(China) has innovated, used technology to rebuild better and become omni-channel very early. A brand has to be shoppable and shippable,” Mr. Tan said.
Companies have accelerated the frequency of managing their cash flow, KPMG Philippines Chief Operating Officer Emmanuel P. Bonoan said at the same event.
“We now review cash flows on a daily basis… we have consultations based on what our cash flows look like. At this time, cash flow is even more important than ever,” he said.
The company’s cybersecurity and digital transformation services have started to pick up, he said.
Mr. Bonoan added that the professional services firm scaled up crisis management meetings, and is investing in training employees.
“Our people have to learn new things and have to get better at the things that they’re doing so you have to make investments in continuous training. While this might last a long time, this situation will pass and you have come out on top of it better than you were when you entered into it.” — J.P.Ibañez