Vol. XXII, No. 86 [ BusinessWorld Online ]
Monday, November 23, 2008 | MANILA, PHILIPPINES
BY JESSICA ANNE D. HERMOSA
LARGE SUPERMARKET chains are likely to continue expanding next year as consumption will be sustained by overseas remittance inflows, experts said late last week. But smaller stores may not share this outlook as the growing number of supermarkets chip away at sales.
"Remittances are countercyclical — if there is a crisis, remittances are increasing. Although of course, this kind of crisis is global so there will be a decrease, but not so much," economist Fernando T. Aldaba of the Ateneo de Manila University told a briefing for the Philippine Association of Supermarkets, Inc. (PASI) last week.
"Remittances will continue to drive personal consumption expenditure," he added.
A foreseen decrease in food and oil prices add to the upbeat outlook for supermarkets.
"Food prices will ease worldwide after harvest time ... and as the agriculture sector produces more," Mr. Aldaba said. He noted that rising import costs, caused by the weakening peso, will be offset by rollbacks in fuel prices.
As such, more store expansions can be expected, at least for the supermarket giants, PASI President Carlos V. Cabochan said at the sidelines of the briefing.
"Major players are not slowing down," Mr. Cabochan said, referring to stores such as SM Hypermart.
Smaller groceries, meanwhile, will not be so keen on opening new branches as competition will eat into sales. "It’s going to be a challenge to attract new shoppers," Mr. Cabochan said.
They will have to distinguish themselves and find a niche, he added, noting that his own chain, CVC Supermarket, is focused on retailing in Central Luzon.
In a telephone interview, SM Hypermarket Executive Vice-President Robert Kwee said they had no intention of slowing on expansion.
"We will still looking at opening three to four more branches next year. The company is not experiencing any slowdown in sales since our strategy is to open branches where there are a lot of customers," Mr. Kwee said.
To date, SM Hypermart has already opened 11 branches nationwide and is planning to open two more branches in Rosales, Pangasinan and Baliuag, Bulacan before the year ends.
As of August, SM’s retail group already had 89 stores composed of 31 department stores; 32 supermarkets, nine of which were SaveMore branches; 11 hypermarts; and 15 Makro outlets. — with Kristine Jane R. Liu
