Retail sector logs ‘robust growth’

Tuesday, December 27, 2011

CEBU’s retail industry saw robust growth this year on the back of high consumer optimism and a strong local economy.

Retailers said despite external factors such as the economic problems in the US and Europe, the sector managed to grow, as shown by the expansion of retail businesses here.

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“Aside from the innovation, which is one key factor for businesses to grow, retailers this year invested heavily on expansion. We see Manila retailers expanding their business in Cebu and Cebuano retailers expanding in neighboring islands,” said Philippine Retailers Association (PRA) Cebu president Melanie Ng.

In November, SM Cebu opened Forever 21, an American-owned fashion chain franchised by SM for the Philippine market to cater to the middle-upper market.

Ayala Center Cebu, on the other hand, is currently building a new phase that will house luxury brands for the Cebuano market.

Informed buyers

Ng said the sector saw growing demand for products and services from consumer, whom she described as “informed buyers”.

Food, clothing/apparel and gadgets are considered top performers in the Cebu retail industry this year.

Ng attributed the performance of the sector to the increased purchasing power of Cebuanos with the presence of business process outsourcing and information technology companies.

“The food sector is growing with the entry of culinary schools here. We see a lot of people getting interested learning culinary arts,” said chef Raki Urbina of Café Laguna.

Urbina said half of culinary graduates stay in the country and open food businesses here. Urbina said Cebu now has growing chef-based restaurants.

Sumosam, a Manila-based Japanese restaurant, also expanded in Cebu by opening its first franchised restaurant in Visayas here. Owners of the restaurant said they were encouraged by Cebu’s thriving economy.

Meanwhile, Jun Yap, owner of Junrex Cellphones & Accessories Inc., reported that sales of mobile devices, particularly smartphones, grew faster last year. because sales were driven by election spending.

“But despite the projected slow growth this year, the market is still good as new models will be released to the market. Consumers now are looking forward to more mobile devices like smartphones and tablets that have data handling capabilities,” Yap said.

Competition

He said social networking sites like Twitter and Facebook have prompted mobile phone manufacturers to come up with products that are data-centric.

Just this month, Apple released to the Philippine market, through Globe Telecom and Smart Communications, the iPhone 4s.

While retailers see brighter prospects ahead for the industry, Bernie Liu, PRA chairman and president and chief executive officer of Golden ABC, the mother company of fashion and lifestyle brand Penshoppe, cautioned them about tighter competition in the market.

He said while retailers should take advantage of the improved economy, they should not forget the essentials of doing and sustaining business.

“Asia is the new West. The region now is dominated by emerging markets such as China and India…and the Philippines is in the middle of this new emerging markets. But this will be both a challenge and a curse for us,” Liu said.

He said the Philippines is in the middle of these new emerging markets and the country should take advantage of the opportunity.

Level up

“We need to know our market better. We are not the only country that is looking at Asia. The West, for instance, is looking at Asia and as they come in, competition will intensify. The local brands need to level up,” he said.

Liu said Filipino retailers need to improve because consumers now are more aware of global standards.

Although the coming of foreign brands is good for consumers, Liu said there would be some degree of difficulty for retailes and “margins will be a bit of a challenge.”

Liu advised retailers to re-study their market. “At these times, you can no longer be everything to anyone anymore. Businesses need to innovate and do product differentiation,” he said.

“But Cebu, in particular, is a robust market. We are generally optimistic with 2012, despite the challenges ahead,” Liu said.