by Sheila Samonte-Pesayco

THEY ARE this generation's Pied Pipers, enticing millions of Filipinos into becoming "mall rats."

They are also considered the economy's saving grace as the profits they make from a predominantly low-income population make up for the slump in manufacturing, construction, and other sectors. In the past decade, consumer spending has accounted for 70 percent of the economy and is expected to continue to be the main driver of growth, especially as the government faces a yawning budget deficit. It is expected that private consumption will continue to increase, lining the pockets of mall developers eager to cater to the whims of a shopaholic country.

Some mall taipans, however, are falling off the list of the Philippines' wealthiest because of their overexpansion into noncore businesses and inability to cope with the fever-pitch competition. The real stalwarts though will continue to have a tight lock on their niche markets for some time. The following is a Who's Who of the thriving Philippine mall business.

HENRY SY, Sultan of Retail
Chinese-Filipino businessman Henry Sy was once called the "Sam Walton of the Far East" because the aggressive expansion of his shopping-mall empire resembled the strategy adopted by the popular Wal-Mart supermarket chain that made Walton a household name in the United States.

Fifty years ago, Sy was peddling dirt-cheap shoes in a small shop called Shoemart in downtown Manila. His big break came in the mid-1980s when the country went through a turbulent political transition after the fall of Marcos. Sy went against the conventional wisdom by buying huge tracts of land in Metro Manila, taking advantage of rock-bottom real-estate prices brought about by the political turmoil and economic crisis.

These purchases made Sy the laughing stock of his business rivals. In the late 1980s, Shoemart began building the 330,000-square meter Megamall in Mandaluyong City, a venture which many in the business community thought foolhardy. After all, the government was then reeling from coup attempts and the Edsa-Ortigas intersection near Megamall was known more as a battleground for various military factions rather than a paradise for shopaholics.

Sy proved his rivals wrong. The clown of the shopping business is now a corporate legend and the sultan of retail. In the last 15 years, Sy has transformed his retail business into property development and mall operation. Nearly one-third of the earnings of his SM Group of Companies comes from leasing mall space. On top of a fixed monthly rent, retailers at SM malls are charged a percentage of their gross sales - five percent for a clothing store, 20 percent for a fast-food operator, and up to 50 percent for an amusement center.

The SM Group is now also the country's biggest cinema operator as all its malls have moviehouses. In 1996, broadcast giant ABS-CBN invited Sy to become a member of its board. He now also sits on the board of several conglomerates.

THE AYALAS, Blue-Chip Developers
The family that built Makati City from a patch of grassland in the early 19th century into a bustling financial and business district is now also transforming the high-traffic retail business.

While the SM Group is considered the biggest mall operator in terms of total mall space, the Ayala Group is the only one that could boast of a consistent 100-percent occupancy rate for all its retail outlets. Its well-designed malls are also considered to be aesthetically superior to the boxlike structures SM is partial to. Moreover, unlike SM, the Ayala malls have been drawing the "A" and "B" economic classes.

The tech-savvy Ayala brothers — Fernando and Jaime Augusto — have also expanded their malls into cyberspace with myAyala.com. Goods and services offered by retailers at the Glorietta malls can be bought from the website which is increasing its traffic due to heavy promotions.

Ayala Land, Inc., developer of the malls, generates nearly two-thirds of its annual income from rentals. The vast Ayala conglomerate now derives 20 percent of its total revenues from its shopping centers in Makati City and in other business hubs, with an annual growth of at least 10 percent, outpacing that of the economy.

Unlike the SM Group which is more focused on mall and property development, the Ayala Group has vast interests in property development (Ayala Land), banking (Bank of the Philippine Islands and BPI Family Bank), telecommunications (Globe Telecom), utilities (Manila Water Services), information technology, and other services.

JOHN GOKONGWEI JR., Savvy Taipan
Competing directly with Sy's SM Group for the middle-income market is another ethnic Chinese businessman who built his fortunes from selling scrap during World War II.

John Gokongwei Jr. was 15 years old when he started peddling soap, candles, and other goods on his bicycle. At 19, he set up his first company, Amasia, which imported scraps of textile, fruits, old magazines, and used clothing from the U.S. In the early 1950s, he started importing cigarettes and whiskey.

Last year, Gokongwei's retail business chalked up P3.4 billion in revenues and accounted for a hefty chunk of the earnings of the family's business conglomerate that includes telecommunications (Digital Telecommunications Philippines, Inc.), transport (Cebu Pacific Air), manufacturing (Universal Robina Corp.), and banking (Robinsons Savings Bank).

In a speech at the Ateneo — whose School of Management, the beneficiary of a P200-million donation from Gokongwei, will be named after the taipan — he said his businesses flourished "because they offered the public a choice."

The family's flagship firm, JG Summit Holdings, recently tied up with Hong Kong's First Pacific Group to control majority of long-time monopoly Philippine Long Distance Telephone Company and own 55 percent of the 150-hectare Fort Bonifacio Global City.

Analysts say the Ayalas' mall chains may be in for tough fight for the "A" and "B" crowd once the Gokongweis turn 60 hectares of the former military base near the Makati central business district into a vast shopping complex.