Odel ties up with Aban’s Colombo City Centre for more outlets
Luxury buying and increasing affluence of the middle class has resulted in retail chain Odel expanding its outlets at the under-construction Colombo City Centre owned by Abans Group.
Odel PLC, owned by Softlogic, said in a Colombo Stock Exchange notice on Monday that the company and its subsidiary, Softlogic Brands (Pvt) Ltd plans to occupy 39,560 square feet (sq ft) at the Colombo City Centre at James Peiris Mawatha that’s coming up and has signed an agreement to this effect. This will house Odel’s department stores, its sports store and Softlogic’s international brands. Already Odel is building a mega shopping complex at Alexandra Place in Colombo 07 at an estimated cost of Rs. 3.5 billion. “They want to open more stores at the Colombo City Centre,” a Colombo City Centre official told the Business Times. He said that Odel would have the largest space at the mixed development.
This year, analysts found that macro instability, along with a number of startling turns in the political sphere, has directly impacted luxury spending in the country. The major driver of luxury buying is the increasing affluence of the emerging middle class which firms like Softlogic have banked on, combined with high tourist arrivals.
This is the same story the world over, says an analyst. “There’s slow growth all around. Brexit, the US presidential election and terrorism have all led to large insecurity and lower consumer confidence, inhibiting sales of personal luxury goods,” he said.
He said that for some luxury and consumer goods companies, the Asian market represent a third or even half of global sales and earnings. He added that Chinese consumers purchase more luxury products than those in any other country, billing for about one-third of global sales. Chinese tourists are also a main target for those building big malls.
Analysts say that locals who buy luxury goods do so to achieve societal acceptance, use luxury brands to indicate social class, symbolising achievement, wealth and status. But here in Colombo, shopping for luxuries is basically not an individual experience and people’s choices of luxury purchases are more about ‘showing off’ rather than purchasing for themselves.
As the environment becomes more trying with tightening purses amidst rising inflation, firms will need to alter their strategies to sell luxury items to the locals, analysts say. “In this case energising domestic demand, adjusting to wobbly tourism flows, appealing to customers in more suitable ways, adapting ranges to local affinity, using omni-channel which is a multichannel sales approach that provides the customer with an integrated shopping experience, etc are things that they can do,” the second analyst said.
Steven Mayes, Managing Director, JLL Lanka (Pvt) Ltd, local arm of the global real-estate consulting firm, told the Business Times that mall culture is still nascent in Colombo and new shopping malls, etc mark an important milestone for the domestic market. “We believe that this holds the potential to become one of the South Asian region’s most promising success stories.”