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‘Mini-marts’ are in as retail giants fight for bigger slice of market

Posted on February 12, 2015 09:50:00 PM [ BusinessWorld Online ]

By Krista Angela M. Montealegre, Senior Reporter
THE BATTLEGROUND for the Philippines’ retail behemoths has shrunk in size -- literally -- from thousands of square meters to now just a few hundred as competition for customer base takes them deeper into residential communities.

Puregold Price Club, Inc., the listed grocery operator owned by businessman Lucio L. Co, announced yesterday it is opening up to three “neighborhood stores,” or compact versions of its bigger supermarkets, in Mega Manila in the first half of the year.

The “mini-mart” stores with sizes of roughly 300 square meters will be built within subdivisions and residential communities, Puregold Vice-President for Operations Antonio E. De Los Santos told a briefing yesterday.

“Some shoppers have big-ticket purchases or when they do planned shopping, they go to the bigger store formats. There are also instances that shoppers only have a short list of things to buy. They don’t want temptations. We are addressing that niche,” he said.

The new store format is a far cry from the hypermarkets, supermarkets and discounters that Puregold customers knew. It also different from the 24/7 convenience store venture it is pursuing with Japan’s Lawson.

A hypermarket is a hybrid of a department store and supermarket with a sales area of at least 2,500 square meters, 35% of which is allocated for non-food products, Claro dG. Cordero Jr., head of research and valuation at property consultancy firm Jones Lang LaSalle, said in a phone interview.

A supermarket has a selling area of between 400 square meters and 2,500 square meters, at least 70% of which is devoted to food and everyday commodities, Mr. Cordero said.

The real estate analyst further explained that a neighborhood store is usually smaller compared to a supermarket and is located within a residential area to cater to the needs of residents. A convenience store, on the other hand, has extended operating hours with a limited stock range of household and grocery items.

Puregold’s venture into mini-marts comes on the heels of the SM Group’s foray into that same retail format. The Henry Sy-led company has yet to see how successful that retail format is in the Philippines through its partnership with Alfamart, one of Indonesia’ biggest mini-mart chain operators.

With an average size of 150 square meters, Alfamart stores offer basic goods, fresh meat, poultry and vegetables as well as food-to-go products. So far, SM’s joint venture has established a network of 22 Alfamart stores in Mega Manila since the first rollout in the middle of 2014.

“In general, all retailers have been introducing new formats -- smaller community retail formats -- in response to providing retail that is more accessible to the communities. These mini-marts are somehow between the convenience store and the supermarkets,” Julius M. Guevara, Colliers International Philippines advisory services, said in a phone interview.

Puregold has been SM’s biggest challenger in the supermarket space because of its scale and its thrust to explore previously untapped markets, Mr. Guevara said.

“The disadvantage of Puregold is it is not a residential developer unlike SM, Robinsons Land Corp. and the Villar group, which have their own captive markets. Moving forward, it would be more challenging for retail players in general with new players like DoubleDragon Properties Corp. coming in,” Mr. Guevara said.

Last year, Gokongwei-led Robinsons Retail Holdings, Inc., which also owns supermarkets, department stores, convenience and specialty stores, introduced a new retail format called Robinsons Easymart, a network of neighborhood grocery stores that are 300-800 square meters big and are built near or within residential communities.

SM Investments and Robinsons Retail did not immediately reply to a request for comment.

Asked if Puregold has captured the full spectrum of the retail sector with its new store format, the company’s Mr. De Los Santos said: “Retail is evolving. The demands of shoppers are continuously evolving.”

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