High consumer confidence, combined with sustained economy, drives the country to become one of the most robust retail markets in the Southeast Asia today. Among all the subsectors of the retail segment, grocery retailers continue to have the most impact on the economy.

According to the 2017 Food Retail Sectoral Report by Global Agricultural Information Network, the largest grocery retailers in the country — SM Supermarket, Robinsons Supermarket and Puregold — still dominate the food retail business that contributed to the robust growth of the industry in the last five years.

The report showed that in 2016, supermarket sales reached $10.21 billion in retail value sales. It added that supermarkets continue to be the most frequently visited modern retailer due to its proximity to residential areas or in shopping malls where consumers regularly visit to shop and recreate.

A 2017 Oxford Business Group (OBG) report noted that grocery retailers continue to have the most impact on the economy due to its more diverse offerings of day-to-day essentials, which satisfy the bulk of consumption needs for the vast majority of Filipino consumers.

“As such, retailers remain heavily committed to providing increased access and product diversification for items such as food and beverages, beauty and personal care, home care products and so on,” the report said.

To provide local consumers more convenience and accessibility, grocery retailers are pursuing smaller store formats. Since 2016, local grocery retailer giants are aggressively extending their reach through convenience stores and minimarts that allow them to cater to consumers in residential areas and the country’s business districts.

“Convenience stores continue to expand due to the bullish Business Process Outsourcing (BPO – call centers) sector and the increasing number of outlets opening in condominiums and areas outside Manila. These stores cover the business centers and BPO hubs and operate on a 24-hour basis, making them an ideal place for midnight shifters to grab food to eat during break time,” the 2017 Food Retail Sectoral Report said.

“Aside from well-stocked shelves of packaged food, beverages, and other basic household necessities, convenience stores also offer other services such as bill payment and mobile phone reloading transactions. Convenience stores and gas marts which are mainly location-oriented are thus able to sell products at a premium in exchange for convenience,” the report added.

In 2016, convenience stores led the growth of modern grocery retailers with almost 17% growth on the number of outlets and 8% in terms of sales. The growth was driven by the existing players in the country such as 7-Eleven, Ministop, All Day and Alfamart, as well as the gaining popularity of various foreign brands such as Lawson and Family Mart.

According to a 2016 Nielsen report, the penetration rate of convenience stores and online shopping have surged significantly, recording an increase to 32% and 38%, respectively, from 2015’s 19% and 35%. This has pushed traditional supermarkets to transform and adapt to the changing needs of the consumers.

“The report found that the lure of cheaper goods online has had a significant impact on consumers’ behavior, with 61% of those surveyed said they choose to buy things online due to cheaper prices, a significant rise from 42% last year. About 56% of the respondents said they prefer online shopping platforms due to ‘easier to compare prices’, an increase of 15% from last year’s figure. Another 54% of respondents said that they shop online because of the delivery service; that number last year was 42%,” Nielsen wrote on its Web site.

To address the needs and growing demands of the customers, some big players in the country today offer additional services such as online grocery shopping and grocery delivery services.

In the coming years, grocery retailers, especially modern grocery retailers, are expected to continue to enjoy growth in both outlet numbers and value sales, Euromonitor International’s 2017 Grocery Retailers in the Philippines report said.

“As grocery retailers remain the major source of food and household consumables, players will strive to adapt to consumers’ needs by opening stores in more accessible locations and increasing their presence in underserved markets. On the other hand, as consumers enjoy increasing purchasing power, players will benefit from larger basket sizes and a higher appreciation for imported products and superior goods,” the report added.

In addition to this, the country’s grocery retail market is forecasted to grow on average 9.3% year-on-year between 2016 and 2021, according to international grocery research group IGD. This will make the country the fifth-largest grocery retail market in Asia, after China, India, Japan and Indonesia.

In a statement released by the research group last year, the grocery retail sales in the country are set to amount to P7.08 trillion by 2021 from P4.53 trillion in 2016. This will be driven by a growing population, strong domestic consumption and a buoyant economy.

“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,” Shirley Zhu, program director for IGD’s Asia-Pacific research, was quoted as saying in a statement.

“There will definitely be fewer ‘mom and pop’ stores — locally known as sari-sari stores — and there is no doubt that the convenience and online channels will 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,” Ms. Zhu added. — Mark Louis F. Ferrolino

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