Phnom Penh’s Evolving Retail Establishments

• 4 August 2018
• Property Focus
• 1300 Views

With an official population of close to 2 million and a growing middle class, coupled with economic growth and changing consumer behaviors, Phnom Penh’s retail property market has been very dynamic over the past five years. The retail scene has evolved to encompass newer formats and concepts.

The most recent milestone has been the emergence of new community malls for the retail developments. TK Avenue was the first successful community mall in Phnom Penh and it has led to the development of upcoming community malls such as Downtown 93, and other container markets. Nguon Chhayleang, CEO of the Pointer, has suggested that most of the container markets are not very nice. “The concepts from one container market to the other are almost exactly the same. People need something new,” she said. Nonetheless, these projects pioneered a new retail format that is now found in many parts of Phnom Penh. In terms of large-scale shopping centres, Cambodia is different from other neighbouring countries such as Thailand (Central Pattana, The Mall Group etc.) and the Philippines (SM Corporation) where local players dominate the market.

In contrast, local retail operators are almost non-existent in Cambodia. Because of this, there is still room for local players to penetrate. Recently Sorya Shopping Center has successfully renovated into Sorya Center Point. The aim is to raise the bar to higher standards to accommodate international brands. In the future, I believe the preference for Cambodian consumers will move towards to one-stop shopping inside modern, large-scale shopping centres – the concept of everything under one roof from cinema, karaoke, bowling, department store, supermarket and variety of fashion brands will become successful.

The development of shopping centres is constrained by several factors in Phnom Penh. Within the core areas of the city, there is a lack of suitable development sites. The only remaining sites at present would be Diamond Island, in which the area is also earmarked for more retail developments. “Phnom Penh lacks developable plots for shopping centres, therefore retail developers have to look for plots outside the core area of the city,” Chan MlopSokha from Sokha Law Firm explained.

The retail business is competitive and challenging. Consumers are looking toward quality products with affordable prices. They are price conscious and demand products that only offer value for money. To operate a shopping centre the key to success has a lot to do with the retailers and the products. For Cambodian consumers, they are looking for well-priced basic products with quality. In the food and beverage sector, successful local and foreign restaurant chains include Master Suki Soup, Shabu Shabu & Sushi Buffet, along with other foreign chains such as Fuji, Swensen’s, The Pizza Company, which are doing equally well.

As competition grows, amateur retailers will find it hard to survive. At the end of the day, quality affordable products that are competitively priced are the key to winning the market. The key drivers of the retail evolution are consumer behaviour and understanding their preferences is essential to retail success.