Majority of Retailers in Cambodia are Targeting Expansion

• 8 December 2021
• Local News
• 2169 Views

By Eric Wong Chon Lap

Retail leasing activity in Cambodia is expected to pick up in the coming months, amid solid expansion demand from retailers, and the completion of new shopping centers. Signs of positive movements for retailers, on store rollout and expansion strategies, following the country reopening policy on November 2021.

Many leading retail developers and retail brands in Cambodia are now focusing on customer experience and interaction. ‘Experience’ played a significant part for both developers and occupiers when creating the physical development. Of course, the future of shopping centers and store formats will be changed to accommodate the change in consumer behavior. The market also witnessed positive movements from retailers in their expansion strategies. However, the expansion will be based on cautious measures such as location, financial parameters of the retailer, and brand expansion strategies, etc.

Although e-commerce is becoming popular these days, majority of the retailers still want to expand their physical store network by eyeing more stores. Prime locations in the city center of Phnom Penh, major shopping malls will remain keenly sought-after locations for retailers, as they pursue quality against the scarcity of available space in these locations.

Retailers’ expansion will also be largely domestic and focus on the local demand, as new COVID-19 infection waves continue to constrain international business travel. Restrictions to contain the infection waves have caused some of the retailers to push back their expectations of sales recovery by one year due to lack of demand. Until now, very few retailers were able to reach their sales volume back to the pre-pandemic levels.

Nevertheless, retailers remain optimistic for a turnaround in the upcoming months, as business activities are expected to gradually resume. Retailers can expect sales performance to improve either moderately or significantly from the Year 2020 or Year 2021. In preparation for this next growth cycle, retailers should take the opportunity to secure favorable lease terms. At this point in time, the retail leasing market is favoring the tenants, therefore retailers should act quickly to renegotiate and secure better locations or rental rates. At the same time, they can also incorporate more flexibility and protection into their new leases.

In the end, retailers are divided about the long-term prospects for the physical store. Some see a decrease in demand with the growing trend of e-commerce adoption, but others see the continued demand of shopping at the physical stores – which are poised to make a big comeback. However, the regular offering and more online orders will continue to fulfill the growing demand of e-commerce business and this will somehow affect the sales of ‘brick-and-mortar’ retailers in the long run.

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Eric Wong has extensive experience in the field of property consulting and development sectors, primarily within the emerging markets of Southeast Asia. From the property consulting perspective, he has led market research assignments inclusive of providing descriptive, exploratory market research and analysis reports within the office, residential, hotel, and retail segments in both quantitative and qualitative methods to determine suitable development types, scale, and product mix, and address property-related matters from project positioning to absorption rates, phasing, and pricing and marketing strategies, etc.

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