THIS was an energetic year for retailers, more so national and international players. Yet it’s a different story for the homegrown ones.
Robert Go, president of the Philippine Retailers’ Association (PRA) in Cebu, said the retail trade sector enjoyed Cebu’s growing economy and people’s stronger purchasing power, boosted by money coming in from the business process utsourcing sector (BPO) and overseas Filipinos.
Giant mall players like SM and Robinsons opened new shopping malls in Cebu, their biggest spaces to date in the Visayas and Mindanao. International brands like Uniqlo, H&M, Tony Moly, Pull& Bear, Sfera, and Bershka penetrated the Cebu market for the first time.
“I see a very strong future here in Cebu,” said Hans Sy, president of SM Prime Holdings Inc., in an interview when the SM Seaside City opened in late November. His company plans to invest at least P20 billion in developing their latest property in the South Road Properties (SRP), where SM Seaside City also stands.
PRA vice chairman Roberto Claudio said in reports that the Philippine retail industry is growing five to eight percent yearly. Citing data from the Department of Trade and Industry, PRA said that retail contributes 13 percent to the country’s gross domestic product (GDP). In the “short term,” this is expected to rise to 15 percent.
One observation of PRA Cebu this year is that growth in the retail trade sector was not mainly in terms of volume, but also value.
“People tend to buy more expensive items. They spend more on luxury products or higher-priced items and this is reflective of the buying power of the consumers,” Go said.
Very minimal inflation in Central Visayas, the PRA Cebu president said, has also encouraged more spending by local buyers.
Like the private sector, the government, particularly the National Economic and Development Authority (Neda), noted the retail sector’s contribution to the Central Visayas economy. Efren Carreon, Neda 7 director, said retail trade is one of the major factors driving Neda’s optimism that Cebu indeed performed better this year than in 2014.
Heading for provinces
Growth last year in Central Visayas stood at 8.8 percent, which is expected to accelerate to nine percent this year.
“The region’s retail trade industry continued to enjoy steady growth amid improving purchasing power of consumers,” said Carreon.
Interestingly, inflation in the region was highest for clothing, which grew by 5.5 percent on average from January to November 2015, versus food which only grew by 1.7 percent.
While national mall players and international brands took opportunities to reach Cebuano buyers, homegrown players tried a different path.
Go’s Prince Hypermart and the Gaisanos are going instead to the neighboring provinces because “Cebu is already very saturated.”
For Gaisano Grand, there will be no Gaisano Grand mall opening in Cebu in 2016. Rather, mall networks will be constructed in other areas like Samar and Davao. The same will apply to Go’s Prince Hypermart.
“It’s a very competitive (mall) business. You have to find your own niche,” Gaisano Grand vice president for operations Genevieve Gaisano-Go said.
If there will be Cebu expansions, these openings will no longer be in the key cities but selected municipalities that are also exhibiting growing economies like Liloan in the north and Argao in the south of Cebu.
Unlike Metro Cebu where malls are close to each other and shoppers have a number of mall options to choose from, Go said homegrown mall players and retailers like him saw an underserved market in the provinces.
For Gaisano Metro, for example, its chairman and chief executive officer Frank Gaisano said next year’s expansion will be in Iloilo, Samar, and Bacolod, among some other identified areas. Gaisano Metro joined the Philippine Stock Exchange (PSE) in November and is now identified as the Metro Retail Stores Group.
Convenience stores, on the other hand, remain strong despite competition. Our Philippine version, the sari-sari stores, are also growing despite threats of extinction as convenience stores, the more modern format, mushroomed.
“The challenge is to keep up with the brands that are flooding the market. It’s a big challenge, how to cope, and that’s why we have to innovate,” Go said.
Go foresees more foreign brands coming to Cebu next year.
“This is a big challenge for us locals. We are improving and we are going to the provinces to maintain our market share because it’s already too overcrowded here,” he said.