Olympia Plaza to target middle-class consumers

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There are now 34 malls in Phnom Penh, and the newest one, Olympia Plaza mall, promises to cater to the local buyer price range and feature predominantly local retailers. Supplied

Phnom Penh’s mall space is increasing rapidly this year in response to growing consumer spending habits, buoyed by the country’s growth of GDP per capita and stable economic growth at an average of 7.2 percent annually. 
 
The World Bank’s reclassification of Cambodia’s economic status from low to lower-middle income bracket last year has also given confidence to major retail investors in regards to the rise of Khmer buying power.
 
But are the prime retail offerings such as Aeon Mall 1 capturing this consumer spending, or are prices still out of reach for most local shoppers?
 
A study conducted by Bonna Realty Group says the demand for shopping precincts has risen three percent in this year’s first quarter, from an index of 79 rising to 82 when compared with the same time last year. 
 
However, vacant space in malls, both completed and under construction, has escalated from 21 percent to 26 percent this year, while supply continues to rise. 
 
Seven tenants at Aeon mall shut their businesses in 2015, complaining of disappointing foot traffic, construction disturbances and overly thrifty patrons, according to a local media report.
 
In an interview with local media, Pen Sokea, Bonna Realty’s director of valuation, said: “The higher demand for more malls is due to several factors. 
 
“These include the increase in population and disposable income, the convenience of shopping as well as the loan interest-lowering policy of microfinance institutions.”
 
There are now 34 malls in Phnom Penh with category A and B developments comprising a majority of this number, according to Bonna Realty. 
 
After Aeon Mall 1, the nation’s first and most well visited mall, some others include Aeon Mall 2, The Bridge Retail, Parkson Mall, Exchange Square and Olympia Plaza.
 
Sorn Seap, the CEO of Key Real Estate, said: “There will be a tight competition among existing and coming malls considering the capital’s small population of middle and high income class.
 
“However, in the future Phnom Penh will see rapidly growing middle-income population with more purchasing power to go shopping.”
 
Although the prime retail market is becoming more saturated, developers like OCIC, soon to launch Olympia Plaza mall, are still hopeful of success in this climate with a mall particularly focusing on the local buyer price range and anchor-tenanted by predominantly local retailers.
 
Olympia Plaza, located inside OCIC’s mega mixed-use Olympia City project alongside Olympic stadium, is surrounded by about 2,000 units of condominiums, 200 soho/office units and hundreds of shop houses. 
 
A large number of these units are now completed and being handed over to residents.
 
Ratana Soy, the PR supervisor of OCIC Group, said: “While most malls target international brands and a high-end customer base, the seven-storey Olympia Plaza of OCIC will focus on local retailers and the middle-income class category. 
 
“We believe that this model will be successful since the middle-income class represents a big share of the total number of population – which is ultimately a much bigger market share than the high end malls’ targets.
 
“Premium products on sale at high end malls are not really attainable for most Khmers given Cambodia’s GDP and income per capita. Therefore, most Khmer shoppers prefer to do window shopping rather than to buy the products at the high end mall – and ultimately will turn to local retailers with a suitable price when they really want to buy.”
 
Commenting on the concept of Olympia Plaza mall, Mr. Sorn added: “Olympia Plaza, that targets the middle income class, will attract a lot of customers since Cambodia is still in the lower-middle income bracket and moving towards the middle-income bracket. 
 
“There is no reason to target customers beyond the middle-income class at this stage, in my opinion.”
 
OCIC’s research dictates that shoppers spend an average of $10-$30 when they go shopping. With this in mind, Mr. Ratana said Olympia Plaza could provide a better price setting to customers in this demographic.
 
 Sok Leakena, a middle-income Phnom Penh resident working in a private company, said: “It’s good news to know Olympia Plaza mall is planning to be different from Aeon Mall by focusing on the middle income class. 
 
“For a person who likes to go shopping like me, this concept is great and I will have more choices to buy different products with a better quality.”
 
Vat Vin is an Editor @Realestate.com.kh

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