[READOUT] How malls are still growing despite a cautious Filipino consumer

Photos from Alabang Town Center Facebook page and Adobe Stock Nico Villarete/Rappler Even in a weak economy, SM and Ayala grew mall revenues by chasing the more 'intentional' Filipino shopper with revamped malls, new experiences, and a bigger push into the provinces Despite a sluggish economy with low growth and high inflation, major mall operators in the Philippines are experiencing revenue growth and increased foot traffic. Filipino consumers are becoming more intentional and value-conscious in their spending, leading retailers to adapt by offering diverse product assortments and enhancing the mall experience with more leisure and dining options. There is a notable shift in consumer behavior towards longer dwell times in malls, influenced by high fuel prices and a preference for air-conditioned environments, while retailers are also expanding into provincial markets. This is AI-generated. Read the article for full context. Report any errors. If you only looked at the headline numbers, this would seem like a difficult time to be selling to Filipino consumers. The economy grew a measly 2.3% in the second quarter of 2026. Inflation is still averaging 5% for 2026. And while average family income rose 16.5% between 2023 and 2025, spending grew even faster at 24.7%, leaving households with less financial breathing room. Contrast that with the H1 2026 result of the country’s biggest mall operators: SM is still growing despite the slowdown. Mall revenues climbed 8% to P41.8 billion, while occupancy reached a record 96%. SM Retail also grew net income 5% to P8.9 billion. Ayala’s malls are proving more resilient than the rest of its business. Ayala Land’s H1 net income fell 19% as property development weakened, but shopping center revenues reached P12 billion and grew about 9% if the sale of Alabang Town Center is stripped out. Same-mall sales rose 7%, foot traffic increased 5%, and mall lease-out improved to 90% from 87% a year earlier. So while the Filipino consumer isn’t necessarily doing great in this tough economy, they haven’t stopped spending either. What has changed is how they spend. Retailers are seeing shoppers become more deliberate and value-conscious, while still willing to splurge on categories they consider worthwhile. [READ] MAP: Where Filipino families earn the most and least Here’s what their numbers are telling us. First, while Filipinos are looking for value, that doesn’t always mean cheap. SM describes shoppers today as more “intentional.” In food retail, it’s seeing more transactions but little growth in basket size. People still need to eat, but they are watching what goes into the cart. In non-food, the pattern is reversed. Transactions are flatter but baskets are bigger, suggesting shoppers may buy less frequently and think harder before finally spending. SM Retail has responded with its “good, better, best” assortment, giving shoppers a cheaper option instead of losing the sale altogether. Second, Filipino customers are looking for experiences rather than just things. To adapt, operators are changing what malls look like and what’s inside them. SM is moving beyond the old “cookie-cutter” mall. SM Supermalls president Steven Tan says the group is tailoring new developments more closely to their communities while putting more emphasis on activities and leisure. SM now has 102 pickleball courts and 22 running hubs, alongside cinemas, wellness concepts, events, and other offerings. SM Nuvali will push that further with a one-hectare air-conditioned indoor garden surrounded by dining, while the group is also rolling out more “eat and play” concepts. Ayala is spending heavily to reinvent its mall experience too. Mall capital expenditures surged 62% to P9.2 billion in the first half of 2026 even as residential capex fell 24%. Glorietta, Greenbelt, TriNoma, and Ayala Center Cebu have completed major renovations. Ayala is now focusing on bringing in new shops, restaurants, and concepts to match the refreshed spaces. Refreshed spaces are already posting an average 25% increase in rent per square meter. Dining is taking up much more space. Restaurants accounted for less than 5% of SM’s tenant mix in 2004. Today, they make up around 30%. Casual dining and food courts are among its strongest-performing categories, while some fashion businesses are finding conditions more challenging. Ayala is seeing a similar pattern, with food and health and beauty among the categories outperforming. Third, Filipino customers are getting more practical about how they commute or travel, resulting in longer dwell times. Looking at parking data, Tan said SM has noticed shoppers staying longer, with dwell time stretching from roughly two hours to around three or three-and-a-half. He partly attributes this to high fuel prices, which discourage driving between multiple destinations, and extreme heat, which makes air-conditioned malls more attractive. That said, while the highest family incomes remain concentrated in and around Metro Manila, mall operators are still betting heavily on the provinces. The latest Family Income and Expenditure Survey for 2025 shows that the highest family incomes still cluster in Luzon. NCR (P574,370), Calabarzon (P526,070) and Central Luzon (P447,310) were the only regions above the national average of about P411,000. But retailers see room to grow beyond. SM says provincial markets, particularly in Visayas and Mindanao, continue to show strong potential. Its second Zamboanga mall was already fully booked even before opening, while new malls and expansions are planned in Tagum, Bohol, Iloilo, Naga, Santo Tomas, Malolos, and General Trias. Ayala is expanding into the provinces too. Its mall pipeline includes Nuvali, Gatewalk in Cebu, Arca South, Evo City, Parklinks, Broadfield, and further expansion of Ayala Center Cebu. We hope this readout helps inform your next strategy or boardroom decision. And as always, feel free to tell us what to tackle next, dear business leader. – Rappler.com Readout is a new content series from data consultancy The Nerve, bringing you insights that bridge the gap between quick news headlines and dense technical reports. Readout tracks and explains business shifts in different Philippine industries. Crafted from on-the-ground reporting and data-driven analyses, Readout provides a clear read on where market and consumption are headed, what’s shaping demand across different sectors, who the key players are, and why it all matters. Subscribe to the Readout newsletter here. How does this make you feel? Loading