AMID the global financial crisis, Cebuanos—who are known to be more particular about value for money—have started to do away with less necessary expenses, like high-end mobile phones and beauty enhancement services.
Pablo “Jun” Yap of Junrex Cellphones and Accessories Inc. reported that the middle-income group, the retail store’s biggest market segment, now has more prudent spending habits, buying less pricey mobile phones.
Yap said the middle-income market segment used to buy newly introduced high-end phones.
“Now, they are not changing their phones because there is no more extra money in the pocket. They are shifting (their attention) to more basic needs,” he said in a press conference Wednesday.
He said the replacement market—comprised of consumers who frequently buy new phone models to replace their old units—was strong last year and early this year, before the financial crisis in the United States began to affect the Philippines.
Declining revenues
Cheng Alonso, hairstylist at Cheng Hair Professionel, said his revenues went down by around P30,000 since March this year as clients deferred visits to his salon.
“Many are scheduled to come back for hair care treatment, but they tell me they’ll wait for December. Maybe it’s the crisis that is making them focus on more important stuff,” he said. “It’s scary. If this continues for long, I might not be able to hang on,” he said.
Alonso said he has to make his operations slim to lessen his overhead and keep afloat.
Chris Tio of Sun Toys International Retail and the Philippine Retailers Association (PRA) Cebu said business organizations have to make their operations more efficient to cope with the present crisis.
Tio said, though, he is confident that the Cebu economy—which has “always been resilient”—will be able to recover as its fundamentals remain strong.
Still, Yap said the retail sector, particularly the cell phone retail business, is feeling the pinch.
Sell more
As buyers go for entry-level phones, Yap said they have to sell more to be able to achieve the revenue levels they used to enjoy before the present crisis.
“With entry-level handsets, we have to sell like 3,000 phones a day to reach P1 million unlike before when it would be like 1,000 phones to reach P1 million,” he said.
Alonso, for his part, said he has to offer discount packages to attract more customers. “But it’s very difficult because my suppliers have increased prices. The problem is, I can’t increase my rates,” he added.
Yap said the good thing about the present situation is that mobile phone manufacturers are responding to the needs of the market.
He said phone manufacturers have developed entry-level phones—those that cost at least P2,500—that have better features. He noted that new entry-level phones now have colored display, for instance.
Melanie Ng, PRA Cebu president and executive vice president of NGenius IT Hub, said computer and notebook manufacturers are also responding to the needs of the market by introducing less costly models.
Yap, also a member of the board of PRA Cebu, stressed the need for business organizations to build up their strength.
“This situation (should) bring out the best in us,” he said. “It challenges us to be creative and to improve our customer services.”
Yap said that PRA is one organization his group can go to because it regularly conducts seminars, workshops and other relevant programs to help telecom retailers like Junrex become more efficient and cope with various crises.
Junrex—an authorized dealer and service partner of Samsung, Nokia, Sony Ericsson, Motorola, LG and Alcatel—now has 19 stores in Cebu since opening its first outlet in 1996.
Despite the financial crisis, Junrex is pursuing its to open a branch in every city in Cebu, including Carcar City, Talisay
City and the City of Naga within the next five years.
“We didn’t know concept shops will be offered to us so our plan got delayed since we have to open and manage these shops,” Yap said.
Junrex forged partnerships with mobile phone makers to open the concept shops for Nokia, Samsung, Sony Ericsson and Motorola. (NRC/LAP)
