According to JLL Jones Lang, LaSalle (a real estate and capital management firm), due to scarcity of stores and shopping malls, online retail industry has been soaring in Sri Lanka. JLL data shows that although there is only 30% of Internet penetration, the growth is fast. Meanwhile mobile device penetration is as high as 107%. Many consumers browse websites using mobile devices.
Gagan Singh, President of JLL Sri Lanka said: “Sri Lanka has good prospects both in physical stores retail as well as online sales.” According to Sri Lankan government, Alibaba has the interest in building an e-commerce platform in Sri Lanka. On the 2017 Davos World Economic Forum, which was held on January 18, Alibaba president Ma Yun and Sri Lankan Finance Minister Ravi Karunanayake met at the informal meeting where Ma showed interest in e-commerce investment in Sri Lanka. Sri Lankan government expressed that Ma will take immediate action to invest in Sri Lanka, which will bring along hundreds of jobs for young Sri Lankans.
According to data by network analysis provider Stat Counter, there are 2.5 billion users connected to the Internet through mobile phones. The convenience and diversified options of e-commerce are very attractive to these Internet users. The most popular products online are electronics, and then home appliance and mobile phones. Usually those products do not require being “touched or felt” by the customers. Generally speaking, high streets, shopping centers and e-commerce are the major three forms of retail. They are all still on the primary stage in Sri Lanka, without one encroaching the other.
Singh said that, “in other countries, e-commerce, regarded as the third form of retail, after high streets and shopping centers, develops slowly. The situation is different in Sri Lanka. Online retail becomes popular while high streets and shopping centers are still on the primary stage. Sri Lankan government is planning on building shopping malls in accordance with international standard. In recent years, per capita income has a substantial growth. However, retail industry is still undeveloped. But the situation is bounded to be changed. At present, the market size is estimated to be between USD 2.5 and 3 billion, increasing with a two-digit rate.
Sri Lanka per capita annual income ranks in the front among South Asia countries. An increase in per capita income will naturally lead to an increase in disposable income. The country’s consumer spending is expected to grow at a CAGR of 17%. At present, the state-owned retail space is extremely short of demand. Real estate industry is also aware of the necessity for Sri Lanka to establish international standard shopping malls.
In Colombo, capital of Sri Lanka, there are less than 10 shopping centers, which are all below international standard. Some new international luxury brands want to enter Colombo, but the lack of high quality retail space prompts them to consider selling products in the high street. However, many first-rate retailers are still looking for a retail space in the new market.
JLL said that in the next few years, Colombo will open more retail corridors. Famous high street brands will be very successful, because they can attract traffic and reduce loss of customers. Selected categories such as clothing, fashion accessories, retail finance and fast food restaurants are on the rise. It is reported that retail corridors newly built are mainly located in business district of Colombo. Due to lack of high quality products in the high street, Sri Lanka’s existing fashion brands and those who want to enter Sri Lanka are looking forward to further development of high street and shopping centers.