Home furnishing, experiential retail seen driving mall traffic amid rising costs

RETAIL DEVELOPERS and mall operators may need to consider adding more home furnishing tenants and experiential concepts to help sustain foot traffic as inflation pressures consumer spending, according to Colliers Philippines.

Joey Roi Bondoc, director for research at Colliers Philippines, said segments beyond traditional food and beverage (F&B) are emerging as key traffic drivers, particularly those tied to lifestyle and experience.

“Number one, home furnishing. So, these are very popular segments right now. You look at the likes of IKEA, Anko, even Flying Tiger Copenhagen. They have been attracting a massive footprint,” He said in an interview with BusinessWorld.

He noted that demand for home-related retail is likely to strengthen alongside the residential market.

“Remember, in Metro Manila alone, we have about close to 30,000 unsold ready for occupancy condos. So, imagine once those condos are sold, the owners will need appliances, will need furnishing, furniture. So, that’s a very good market,” he said.

Apart from home furnishing, Mr. Bondoc pointed to the growing importance of experiential or immersive retail formats in attracting shoppers.

“One example is having, say, pickleball courts. So, that’s a very good opportunity because you actually attract a huge consumer traffic footfall because the pickleball players, they go there not just alone,” he said.

“So, they have their competitors, they have their families, friends playing. So, you have experiential, immersive retail… these are segments that are very popular right now aside from food and beverage,” he added.

Hybrid concepts that combine retail with dining or leisure elements are also gaining traction, he said.

“I think one key trend that we have been seeing, if you look at the clothing stores, Muji, what do they have? Coffee shop. So, they have their own coffee shop within their own retail space,” Mr. Bondoc said.

“And why is that important? And why is this attracting a lot of consumers? After you sip coffee, you shop again… when they stay longer, they spend more,” he added.

Mr. Bondoc said malls must offer unique experiences to draw consumers, especially as rising fuel costs make discretionary trips less attractive.

“I think you should really make sure that this space that will be visited by people offers something unique… you need to differentiate,” he said.

“Differentiate, innovate. Otherwise, you will evaporate,” he added.

Colliers data showed that retail vacancy in Metro Manila continued to improve to about 10.8% in the first quarter, from 11.4% in the third quarter of 2025, although a full return to pre-pandemic levels may take longer due to macroeconomic headwinds.

At the same time, supply growth has moderated, with average annual new retail space projected at around 113,000 square meters (sq.m.) from 2026 to 2028, significantly lower than the 322,000 sq.m. recorded between 2017 and 2019.

In the first quarter alone, about 96,000 sq.m. of new retail space was completed, bringing total leasable space in Metro Manila to 7.9 million sq.m., according to the Colliers report.

GEN Z, MILLENNIALS KEY MARKET
Mr. Bondoc said younger consumers remain a critical market for retailers despite inflation, particularly those seeking shared and social experiences.

“I think you need to look at the young, the Gen Z, millennial-dominated workforce. This is a market that we need to consider,” he said.

“They don’t just shop online. They’re also shopping in a physical store… they want to do activities together,” he added.

He said creating visually appealing and socially engaging spaces can help attract these consumers.

“Experience is very important. Make your spaces Instagrammable,” he said.

Colliers noted that F&B tenants continue to dominate new retail entrants, accounting for 49% of upcoming retailers in the first quarter, up from 43% previously, underscoring the continued importance of experiential and lifestyle-driven offerings.

However, the firm warned that inflation and geopolitical tensions could dampen retail recovery, with consumers likely to cut back on discretionary spending and retailers facing higher operating costs.

Still, Mr. Bondoc said malls that adapt to changing consumer preferences and invest in differentiated concepts are better positioned to sustain traffic.

“So, aside from F&B, the immersive experiential… you have the coffee shops or clothing stores that have coffee shops. And then, you have the home furnishing. So, these are the three segments that are really attracting a lot of foot traffic,” he said. — Juliana Chloe A. Gonzales