Supermarket, grocery industry could be region’s 5th largest

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THE PHILIPPINES could have the 5th largest supermarket and grocery industry in the region by 2021, with domestic consumption being pushed by a strong economy alongside a steadily-growing population.

International grocery research group IGD said it projects 9.3% year-on-year average growth in the country’s retail market between 2016 and 2021.

With retail sales amounting to P4.53 trillion in 2016, the market could grow to as much as P7.08 trillion in the next five years. The increase in consumption will put the Philippines behind China, India, Japan and Indonesia in terms of retail market size.

“The Philippines is an exciting market to watch. Modern trade currently accounts for about 20% of total grocery retail sales and is growing rapidly. We expect to see fast growth in both the number of outlets and sales for modern grocery retailers,” program director for IGD’s Asia Pacific research Shirley Zhu said in a statement.

The research firm cited grocery retailers SM Retail, Puregold Price Club, Inc., and Robinsons Supermarket as dominant players.

SM Retail, a unit of SM Investments Corp., is ramping up the expansion of its mid-sized and small-format stores. Of the 144 stores it opened in 2016, 111 were under the Alfamart brand, which is a joint venture with Indonesia’s PT Sumber Alfaria Trijaya. The company’s focus is to expand outside Metro Manila, with 80% of its openings last year located in the provinces.

Puregold and Robinsons have signaled similar plans.

IGD also noted that the country’s fastest-growing retailer, 7-Eleven, is bringing more of its stores to the provinces. As of end-March, 7-Eleven has 2,031 stores across the country, 1,649 of which are in Luzon, 261 in Visayas, and 121 in Mindanao. Of this, only 811 are in Metro Manila.

The demand for more convenience stores is primarily due to the presence of business process outsourcing firms in the country, which employ young people who would want to “shop for their groceries as conveniently as possible.”

“Driven by more disposable income and increasingly urbanized lifestyles, Filipino shoppers are demanding more convenience in their grocery shopping. As a result, convenience and online are the hottest channels in the market,” Ms. Zhu said.

Ms. Zhu further noted the rising trend of online grocery shopping, which may affect the future of these retailers as consumers demand more convenience when doing their grocery shopping.

“Many brick and mortar retailers have already been experimenting with their own e-commerce solutions,” she said.

Online marketplace and leading Southeast Asian e-commerce platform Lazada has announced plans to sell groceries online in the next two years. Since the company’s entry into the Philippines in 2012, the site has amassed over six million users in the country.

The demand for convenience stores and shift to e-commerce would then prove to be a good venture for companies, which Ms. Zhu said would be on a fast growth trajectory over the next few years.

“There is a wealth of opportunity for retailers and suppliers looking to grab a slice of the action in this rapidly evolving market,” she said. — Arra B. Francia