Myanmar, one of the fast-growing countries in Southeast Asia with accelerating GDP has been the eye-catcher for the investors for the past few years. Since the opening of Myanmar in 2012, improvements have been noticed in many sectors all around the country and that includes retail industry as well. In other more developed cities, the increasing popularity and efficiency of e-commerce has become a threat to the retail centres as consumers start to prioritize convenience over experience. Similarly, the current pandemic has forced the government to consider putting more focus on e-commerce amid the many challenges that it entails.
The State of Brick-and-Mortar
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The retail sector is still the best performing sector in the market, boasting an excellent occupancy while also enjoying healthy level of rental rates. Over the past decade, the availability of recreational activities in Yangon has been very limited. Many consumers have viewed retail centres as the main indoor alternative to parks especially during the warm and rainy seasons, attributing to the rapid increase in foot traffic within the establishments. Despite this, the modern shopping centres in the city leaves a lot to be desired, with very limited recreational activities that limits the overall potential of the developments. |
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Currently, the classic characteristics of the shopping malls can be portrayed as a traditional retail establishment with high efficiency ratio without much public areas. The average leasable area for the major shopping centres is somewhere around 22,300 sqm which is relatively small compared to those of other countries. Nonetheless, the market is now slowly starting to show a glimpse of more modernized and hybrid establishments with the introduction of newer shopping centres that employ a mix of indoor and outdoor open spaces as well as employing new concepts that are starting to pique the interest of local consumers. |
Aftermath of COVID-19
Unfortunately, the increasing momentum of the retail market was circumvented by the global pandemic caused by coronavirus. Many upcoming developments have been delayed while a significant decline in foot traffic in some shopping centres have also been noticed.
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The enforcement of social distancing measures has led people to avoid crowded public areas, which have negatively affected the retail market. Though not being forced to stop operations, the shopping centres are going to greater lengths in precautionary actions, prioritizing the safety of the consumers. Chances are the retail industry will have to adjust the way they engage their businesses from employing day-to-day safety measures to possibly restructuring the overall designs of future retail establishments. The first step of bringing the business back to its busy self is to make the customers feel safe at the places they are meant to spend hours in. Safety measures should not be only limited to providing hand sanitizers, carefully measuring body temperature, and requiring face masks. This may also include limiting the number of people inside the establishment to still properly conduct social distancing. |
Moreover, it is also noticeable that the location and the surroundings play a more important role in the performance of retail establishments. Likewise, shopping centres in mixed-use developments that include office buildings are currently performing better than stand-alone shopping centres due to direct demand. While F&B tenants remain resilient, other tenants have now introduced different promotions and discounts to encourage more sales transactions among consumers.
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Going forward, if the effect of the pandemic persists, it is likely that we will witness the closure of many shops inside the shopping centres, mainly on the fashion and accessories category. This would likely shift the tenancy landscape of the retail market in Yangon, putting more preference on F&B and entertainment tenants over other categories, at least in the near to medium term. |
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Myanmar’s Digital Journey
The government is now rapidly encouraging the development of the e-commerce industry by prioritizing it in the COVID-19 Economic Relief Plan (CERP) (Link for CERP: https://www.moi.gov.mm/moi:eng/?q=news/28/04/2020/id-21511). However, it is important to realize that Myanmar’s E-commerce is still at the very early stages with different challenges and obstacles to consider.
During the arrival of the pandemic, majority of the population have increased the amount of time they spend on the internet. According to Telenor Myanmar, internet usage (in its network) has increased by 27% during the COVID-19 pandemic. Also, 40% increase in content streaming traffic was seen during the period, and was particularly high during the 10-day Thingyan holiday. Together with growing opportunity, a large variety of online shops in all sort of digital platforms emerged.
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The demand to shop online in such platforms are also increasing since consumers are prioritizing the convenience. However, there are still major challenges that the e-commerce needs to overcome to maximize the potential. For one, internet accessibility in Myanmar is still known to be relatively low partnered with the general lack of internet literacy. According to Internet World Statistics, the internet penetration in Myanmar has reached to 22 million internet users with 41% as of January 2020 from around 21 million users with 39% in 2019. |
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Payment systems has also been a point of concern. Currently, the total population of Myanmar with bank accounts is relatively small. According to World Bank Global Financial Inclusion Data, only around 26% of the population has a bank account. In addition, e-payment platforms do not provide inter-bank transactions making it difficult for consumers to get used to. This problem is now slowly being addressed with the recent introduction of Onepay Application which is the first mobile money platform that allows the mobile interbank service for seven banks. |
Lastly, physical infrastructure is also one of the main concerns that needs to be addressed such as the worsening traffic conditions partnered by the unavailability of motorcycles to be used to combat congested road networks. At the moment, products ordered online would still take a couple of weeks as compared the same-day delivery standard in more developed cities. While it is true that Myanmar’s e-commerce market has a high potential, the priority should be placed on building the foundation firmly while trying to catch up with the global digitalization at the same time.
E-commerce Vs. Physical Retail Establishments
Regardless of new adaptations and changes, the physical retail establishments will still play a role even with the eventual improvement of the e-commerce industry. The retail establishments will fit in with the de facto new normal by equipping relevant digital infrastructure and initiating appropriate strategies. Unifying the digital and physical store experience will expectantly offset the fall of demand in the retail sector despite the shortcomings in both digital and physical infrastructure. One example is City Mall Online which is offering an online shopping platform and delivery service for the products that are available in St. John City Mall Shopping Centre. |
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The e-commerce industry will also grow as digitalization is something inevitable. Many will embrace the convenience of having the whole shopping experience in the palm of their hands. However, many consumers will likely still prefer the physical shopping experience due to satisfaction of trying out different products before the purchasing. More importantly, Yangon’s lack in recreational places and hang-out spots is all the more reason why retail establishments will remain relevant in the future. Going forward, the developers should take this time to revisit the plans by coming up with a sustainable design that will blend in well with dynamics of the rapidly improving e-commerce industry.