FEATURE
PHILIPPINE RETAILING
Image source: www.walletgains.com
IGD: BRIGHT
PROSPECTS FOR
GROCERY IN
THE PHILIPPINES
With the Philippines forecast to have one of the strongest GDP growth rates in Asia over the next few years,
Jiong-Jiong Yu, Senior Retail Analyst at IGD Asia, examines what this will mean for the country’s grocery market
IGD expects the grocery retail market
in the Philippines to see strong
nominal growth towards 2023, aided
by relatively low inflation, stronger
disposable incomes boosting
consumption and increasingly
urbanised lifestyles.
Positive outlook
The Philippine grocery retail market is expected to see a
10.2% CAGR over the next four years, reaching US$82
billion by 2023, driven by a booming population, strong
domestic consumption and a buoyant economy. The
government is expected to continue the reform progress
and create a better environment for businesses.
Domestic retailers lead the way
SM Retail, Puregold, Robinsons and Philippines Seven
Corp account for a large proportion of the country’s
modern trade and they have shown consistently strong
growth. They all have clear ambitions to expand their
business further and open more stores to cover wider
geographic areas.
SM Retail – SM Retail will continue to draw on the
synergy between retail and other businesses of the SM
Investment group, such as property and banking, to scale
up its retail operation. After forging a partnership with
Indonesian retailer Alfamart in 2014, SM will put a
strong focus on bringing the successful neighbourhood
supermarket model to the Philippines. The retailer has
also identified regions in the south of the country as key
growth opportunities, and the development of malls and
department stores is underway. SM has built an in-house
data analytics team to draw insight from shoppers’
transaction data so that stores can develop tailored
offers.
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Puregold – Puregold plans to capture higher growth in
the Visayas and Mindanao through new store openings.
The retailer taps into the traditional trade customer base
by championing the cause of sari-sari store owners, with
a range of initiatives to support and engage with its trade
customers. Puregold has consolidated its Puregold Junior
and Extra banners under one Puregold brand, creating a
stronger unified brand image. It also returned its 70%
stake in PG Lawson to Lawson, to focus on the Puregold
brand and support for sari-sari stores. Puregold was the
first grocery retailer in the Philippines to launch its own
mobile app and an online grocery service, gaining
first-mover advantage ahead of its competitors.
Robinsons – Robinsons has a broad retail portfolio and is
seeking ways to bring this together. It will continue
focusing on its community malls format Robinsons
Townville. The acquisition of Rustan’s from Dairy Farm in
2018 propelled Robinsons to be the third-largest retailer
in the Philippines, as well as adding hypermarkets to the
portfolio. The retailer has also recognised the potential of
ecommerce and will look to increase its online sales, as
well as seeing the value in its Reward Loyalty
programme, which has more than one million members.
Philippine Seven Corp – The longest-standing and largest
player in modern convenience in the Philippines, 7-Eleven
aims to maintain its lead by continuing to open new
stores. It is targeting 3,000 and more stores nationwide
by 2020. It has been expanding in the Visayas and
Mindanao and is now revisiting Metro Manila and nearby
cities, taking over prime locations. Franchise is a key
route to growth, accounting for around 57% of stores.
The retailer sets itself apart from competitors by
innovating its offer, with 24-hour openings,
over-the-counter medications and new food-to-go
products.
Metro Retail Store Group – As the largest retailer in the
Visayas region, Metro Retail has seen robust growth in
the past few years. The retailer continues to expand its
footprint outside this region and is looking to harness
opportunities presented by other highly populated and
fast-growing areas such as Quezon City and Metro
Manila.
Convenience remains hot property
Filipino shoppers are demanding more convenience in
their grocery shopping and as a result, convenience is the
fastest growing physical store channel. The number of
c-stores in the country has more than doubled in the past
five years and will continue to expand after a flurry of
pan-Asian convenience store retailers entered the
country. 7-Eleven and Alfamart continue to drive this part
of the market, bringing in more convenience banners.
This trend is being driven by the rising number of
business process outsourcing (BPO), or call centres.
These are centred mainly in urban areas, operate 24
hours a day and tend to employ young people with
disposable income, who want to shop for their groceries
as conveniently as possible.
Supermarkets are the largest modern trade channel
Supermarkets account for more than half of modern
trade sales today and are forecast to increase their share
to 63% by 2023 as retailers expand rapidly beyond
Metro Manila.
Find more insights at IGD Asia: https://asia.igd.com/about/free-content
Jiong-Jiong Yu, Senior Retail
Analyst at IGD
Jiong-Jiong provides insight on retailer
strategies and industry trends in China,
South Korea, the Philippines, Taiwan
and Bangladesh, as well as leading
IGD’s innovation and drugstore
workstreams in Asia. She has worked
with both retailers and manufacturers
in the last 10 years on shopper insight,
growth strategy and category
management projects. Her background
is in management consulting, with
experience in qualitative and
quantitative research gained at GfK and
dunnhumby.