Camorongan, Jelo Matt

Valbarez, Adhelyd
Valladolid, Mia
Villadolid, Darlene
Villanueva, Leah Paula

Mall Retailing in the Philippines
Type of Market Structure of Mall Retailing in the Philippines

Our group decided that the type of market structure of the mall retailing in the Philippines
is a monopolistic competition. At first we find defining the market structure of the mall retailing
very hard to differentiate especially it is slightly similar to the market structure of perfect
competition but we just search the definition of the both of them and with the help of the lecture
about market structures and added online research. Monopolistic competition is defined as;

it is a type of imperfect competition such that many producers sell products that are
differentiated from one another (e.g. by branding or quality) and hence are not perfect
substitutes. I n monopolistic competition, a firm takes the prices charged by its rivals as given
and ignores the impact of its own prices on the prices of other firms
-Wikipedia
From this definition we decided that Mall Retailing in our country is a monopolistic
competition. They sell different products based on branding (Bench, Penshoppe, Oxygen and
etc.) and quality and they are not perfect substitutes.





Number of Sellers

There are many firms or sellers for monopolistic competition. It is because of the low
barrier of entry present in the said market structure just like the perfect competition. In the mall
retailers in the Philippines there are currently 12 mall retailers in the Philippines.
SM Supermalls. SM Supermalls 10th Floor, Mall of Asia Arena Annex Building, Coral Way
corner J.W. Diokno Boulevard, Mall of Asia Complex, Pasay City 47 1958 present The largest
mall retailer in the Philippines. SM Supermalls Official Website
Robinsons Malls. Level 2, Galleria Corporate Center, EDSA corner Ortigas Avenue, Quezon
City 32 1997 present Second largest mall retailer in the Philippines. Robinsons Malls Official
Website
Ayala Malls. Tower 1, Ayala Triangle, Ayala Avenue, Makati City 16 1988 present Third
largest shopping mall retailer in the Philippines. Ayala Malls Official Website
Walter Mart 7th floor Walter Mart Building, 8001A EDSA, Barangay Veterans Village,
Quezon City 17 1993 present The pioneer in the community malls segment in the Philippines.
Walter Mart Official Website
Metro Gaisano Cebu City 8 1982 present The Metro Gaisano chain of shopping malls was
started by Victor Gaisano in 1982. Metro Gaisano official Website
Megaworld Lifestyle Malls 7/F 1880 Building, Eastwood Avenue, Eastwood City, E.
Rodriquez, Jr Ave (C-5), Bagumbayan, Quezon City 5 2009 present Newest mall retailer in the
Philippines. Megaworld Lifestyle Malls Official Website
Starmall 1550 Shaw Boulevard Corner EDSA, Mandaluyong 5 1972 present Starmall is the
retail development of Vista Land and Lifescapes, Inc. founded by former Senator Manny Villar.
It started as a small commercial complex in Las Pias known as Manuela Shopping Center in
1972. Starmall Official Website
Isetann Department Store, Inc. 7/F Isetann Cinerama Recto, C.M. Recto Ave. cor. Evangelista
St. and Quezon Blvd., Quiapo, Manila 4 1980 present One of the mall retailers to serve Metro
Manila. Isetann Department Store, Inc. Official Website
Greenfield Development Plymouth Drive Corner United Street Greenfield District,
Mandaluyong 4 1961 present From low cost mall development, Greenfield revived itself in the
2000s when it redeveloped the Greenfield district in Mandaluyong City into the first smart and
connected district in the country. Greenfield Development
Ever Gotesco Malls C.M. Recto Ave., Quiapo, Manila 3 1972 present One of the mall retailers
to serve Metro Manila.
Ortigas Malls 9th Floor, Ortigas Building, Ortigas Avenue, Pasig City 1600 2 1966 present One
of the mall retailers to serve Pasig and Mandaluyong especially San Juan.
Fact: Shopping malls play a big role in the Philippine economy. Why? Because of the locations
of this shopping malls just like SM Supermalls which has over 43 malls nationwide. The
interaction between the Buyers (consumers) and the Sellers (producers) are maximized because
they have one place that is comfortable (in favor of consumers) where stalls are combined so that
consumers would maximize their utilization.

Product

The product of the monopolistic competition is differentiated that is why the other term
for monopolistic competition is imperfect or impure competition because the products are
different from each other. In the monopolistic competition type of market structure, it depends
more on the Advertisement and Brand of the product the competitor or the firm is selling. For
instance;

Some people like Bench over Penshoppe even though they are a little bit similar. But
what if there would be a substantial price difference between the two. Then the consumers
would switch from one to another. So if Bench would have a big promotional sale in one of
the malls, then some Penshoppe buyers would switch to Bench (temporarily or long term)

Another important use of the brand name is that it makes the demand curve less elastic
and can enable the firm to earn high profits. Another thing is if the consumer would experience
his/her optimal utilization, he/she would build loyalty to that brand thus the price elasticity of
that product would decrease.



Power of firm over price

There is a little power of the firm over price in this kind of market structure, because they
are able to differentiate their product in some way from their rivals. They dont care about the
positive or negative impact of their price increase or decrease to other firms because they have
differentiated products.

Firms are price makers and are faced with a downward sloping demand curve.
Because each firm makes a unique product, it can charge a higher or lower price than its
rivals. The firm can set its own price and does not have to take' it from the industry as a
whole, though the industry price may be a guideline, or becomes a constraint. This also means
that the demand curve will slope downwards.
-economicsonline.co
Barriers to entry

In monopolistic competition, there are only a low percentage of barriers before entry.
They can enter whenever they like, just make sure you have the proper or a little excess capital
and a unique product to maximize profit. You can also leave the market without extra costs or
liquidation costs

I n the long run there are no entry and exit costs. There are numerous firms waiting to
enter the market, each with their own "unique" product or in pursuit of positive profits. Any
firm unable to cover its costs can leave the market without incurring liquidation costs. This
assumption implies that there are low start-up costs, no sunk costs and no exit costs.
-Wikipedia





Non- Price Competition

The Non Price Competitions are the advertisements and product differentia, monopolistic
competitors has the incentive to advertise. What is the purpose of advertising? The answer is to
increase demand so that it would shift the demand curve to the right side and make it more
inelastic. Advertising also increases Average Total Cost (ATC).

Product differentia means that the consumers perception of the product is not the same.
Therefore marketing should enter the picture to endorse everything about the product. Firms may
differentiate products by perceived quality, color, reliability, style, safety features, packaging,
purchase terms, warranties and guarantees, location, availability (hours of operation), and etc. the
consumers would have a sense of trust in branded and they have already known products.

Extra Information

In the short run supernormal profits are possible, but in the long run new firms
are attracted into the industry, because of low barriers to entry, good knowledge and an
opportunity to differentiate. At profit maximization, MC = MR, and output is Q and price P.
Given that price (AR) is above ATC at Q, supernormal profits are possible (area PABC).

As new firms enter the market, demand for the existing firms products becomes more
elastic and the demand curve shifts to the left, driving down price. Eventually, all super-normal
profits are eroded away. Super-normal profits attract in new entrants, which shifts the demand
curve for existing firm to the left. New entrants continue until only normal profit is available. At
this point, firms have reached their long run equilibrium. Clearly, the firm benefits most when it
is in its short run and will try to stay in the short run by innovating, and further product
differentiation. Clearly, the firm benefits most when it is in its short run and will try to stay in the
short run by innovating, and further product differentiation.

We can conclude that the monopolistic competition in the long run is not that efficient
but how do malls survive? Discounts. Malls attract consumers by giving as much as 60%
discount on products that have a price, extracting consumers from other retailers.

Advantages and Disadvantages

There are several advantages that monopolistic competition in malls could bring. First is
that, there are no barriers to entry making it more contestable. Second is that the differentiated
products allow diversity, choice and utility because malls have different stalls that sells different
products. Lastly is, it is more advantageous in aspects of change especially in attracting
customers.

When there are advantages, there are also disadvantages. First disadvantage is some of
the differentiated products do not create much of a utility but more of a waste especially in
excess packaging. Last is inefficiency.

But, WHY IS IT INEFFICIENT? Because there is a tendency for excess capacity
because firms can never fully exploit their fixed factors because mass production is difficult.
This means they are productively inefficient in both the long and short run. However, this is may
be outweighed by the advantages of diversity and choice.


Disclaimer
Some of the data and pictures given here are from websites like:
Wikipedia.com and economicsonline.co.uk