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SM to buy grocery chains to hasten expansion

Published on Friday, 31 August 2012 00:00
Malaya Business News Online | Philippine Business News

SM Investments Corp. plans to buy more retail grocery chains to hasten expansion. By doing this, SM will be joining the bandwagon started by PureGold’s  fast acquisitions of smaller retail chains like Parco.

Jose Sio, SM Investments chief finance officer, said the company is on the lookout for buying “opportunities” in the Visayas and Mindanao area, which if successful could accelerate the company’s plan to open  30 new stores  every year.

“If there is opportunity during this remaining months, and we see a good opportunity, we would acquire,” said Sio.

Sio said the acquisitions would compliment SM Investment’s presence in General Santos City and Davao, while expanding its presence in Southern Philippines.

“We just opened GenSan, so at least we already have a foothold there,” said Sio.

The move towards acquisition is departure in the company’s old tack of growing the business organically --- where the company sets up its own structure to house its retail stores.

“The 30 new stores every are merely organic growth... The direction then is we just open our department store, our food business in the mall where we are operating. Three years ago, we said, okay if it is within the vicinity of the mall. Now we are improving that, where it’s not necessarily within the vicinity but anywhere,” said Sio.

“Because what is important in retail is volume. The more volume you sell, the lower your cost and lesser the expense. Retail is low margin so you have to improve that retail,” he added.

Robert Kwee, SM Retail executive vice president, recently said that bulk of the expansion will be for its SaveMore stores. SM Retail’s food business can be found on SaveMore stores, SM Supermarket, and SM Hypermarket.

Sio expressed confidence of closing “some” within the rest of the year with the company’s preferred target be a business that has a network of stores in good locations.

“In choosing that, we have to see what location. Second is the number of stores that he has. Five in a small city or small or medium sized area is fine,” he said.

“If the location is right, we can improve not just the store but the travelling area. If there is a potential then create that into a regional mall with more tenants,” Sio added.
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