INDONESIAN mini-mart chain Alfamart is planning to open 200 new stores in the Philippines next year, according to a report by Fitch Ratings.
In its report, Fitch said PT Sumber Alfaria Trijaya Tbk (Alfamart) is aggressively expanding its footprint in the Philippines where it partnered with the SM Group.
Fitch said Alfamart currently has 400 stores in the Philippines, after it opened 180 new stores this year.
It noted Alfamart is planning to open 200 new stores, which will bring its Philippine store network to 600 by end-2019.
“Alfamart’s investment risk for its Philippine expansion is mitigated by the strong presence of SM Group in the country…. Fitch expects Alfamart to have access to SM Group’s large business network and tap its widely known brand,” it said.
Alfamart has a 35% stake in Alfamart Philippines, which is under SM Retail, Inc. SM Retail is part of the Sy family’s holding firm, SM Investments Corp., which also has core interests in property and banking.
As of end-September, SM Retail had 1,729 stores nationwide, namely: 62 SM Stores, 56 SM Supermarkets, 194 Savemore stores, 50 SM Hypermarkets, 52 WalterMart stores and 1,315 Specialty stores.
Fitch also cited similarities between the Philippine and Indonesian market, which works to Alfamart’s advantage.
“Both Indonesia and the Philippines are consumer-driven markets with young populations and expanding middle classes. Both economies have similar income levels of GDP per capita of $3,000-U$4,000. Consumers in both markets also prefer to buy small amounts of bundled products rather than filling grocery carts,” it said.
The mini-mart sector in the Philippines “as untapped and having limited competition,” Fitch said.
“The existing players mostly operate convenience stores that carry more limited products. Alfamart’s stores offer additional products, such as fresh and frozen food, personal care and small household appliances, giving the company some competitive advantage in grabbing market share,” the ratings agency said.
Unlike convenience stores, Alfamart offer basic goods, fresh meat, poultry, vegetables and food-to-go products.
“Alfamart chose to expand in the Philippines as it believes it has more potential than other south-east Asian markets, such as Thailand and Vietnam,” Fitch said.
Fitch said Alfamart’s Philippine expansion may partially offset slowing growth in its home country. It noted Alfamart had 75 net store openings in the first 10 months of the year, after closing some underperforming stores. — Cathy Rose A. Garcia