International supermarket chains might soon start operating in the Philippines
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With the Philippine economy expected to continue along its growth path, it might not take long before international supermarket chains start operating in the country.
This developed as the British Chamber of Commerce of the Philippines (BCCP) said it will continue to push for a bigger market share for its food and beverage products here in the country.
Philippine Amalgamated Supermarket Association President Steven Cua said the current influx of imported brands in groceries and supermarkets might be the way of testing the market.
“The international chains are hot on our market. We have a good economy, and investor confidence is here. Instead of stores, there are goods now. They are also joining trade shows,” Cua said.
However, Cua said what is preventing these chains from starting operations in the country are the low margins on sales.
“Our margins are too low. We are the lowest in the world, at 2 percent to 12 percent,” Cua said, while pointing at the Department of Trade and Industry’s suggested retail price as the main factor. He said that within Asia alone, the sales margins are between 13 percent and 25 percent.
Cua also cited rent, salary, electricity and taxes as the other factors that might prevent international supermarkets from setting operations in the country.
Then he said there are the Big 5 in local-supermarket operations, including SM, Robinsons, Puregold, Super 8 and Metro Gaisano, which controls a big chunk of the market.
“We have a free enterprise. It is either the smaller ones sell or they open up beside them,” Cua said, while adding that the Big 5 are now using real-estate brokers in their expansion.
He also said that recently Walmart pulled out its operations in Indonesia and South Korea.
“It is either the smaller ones sell or they open up beside them,” Cua said, while adding that the Big 5 are now using real-estate brokers in their expansion.”
Meanwhile, BCCP Chairman Cris Nelson said British food and beverages are making inroads in the local market, while stopping short of saying if British supermarket chains will actually be entering the country.
“Marks & Spencer [M&S] is here in the Philippines but like a lot of companies, it needed to establish itself first. Based on my experience in this market, you have to get yourself successfully introduce in key areas and to develop thereafter,” Nelson said.
He added: “The Philippines is a very interesting market. It is a challenging market with multiple points of sale. It is a logistical challenge because of the multiple islands.”
Aside from M&S, Nelson said Tesco, a British multinational grocery and general merchandise retailer, has some of its products now also available in Rustan’s.
Another brand that is also being made available in Rustan’s is Waitrose and its pantry products. However, like Tesco, it does not have physical stores yet in the country.
However, he said international food and beverage brands trying to enter the local market would have to deal with distribution and manufacturing issues.
“Distribution is a very critical factor in the Philippines. Let us not forget this is one of the most challenging aspects of doing business. As soon as you get the demand, you will also have to develop your supply line. You need to keep your points very close together,” he said.
Nelson said more and more British companies are expected to enter the country and promising Filipinos will have the opportunity to enjoy their brands.
Questions & Answers
Q.What is the main barrier preventing international supermarket chains from starting operations in the Philippines, according to Steven Cua?
What is the main barrier preventing international supermarket chains from starting operations in the Philippines, according to Steven Cua?
Steven Cua states that low margins on sales are the primary factor, noting Philippine margins are 2 percent to 12 percent, significantly lower than the 13 percent to 25 percent typical in other Asian markets.
Q.Which factors, apart from sales margins, might deter international supermarkets from operating in the Philippines?
Which factors, apart from sales margins, might deter international supermarkets from operating in the Philippines?
Steven Cua also identifies rent, salary, electricity, and taxes as additional factors that could prevent international supermarket chains from establishing operations in the country.
Q.What challenge do international food and beverage brands face when trying to enter the Philippine market?
What challenge do international food and beverage brands face when trying to enter the Philippine market?
International food and beverage brands must contend with significant distribution and manufacturing issues. Cris Nelson highlighted distribution as a very critical and challenging aspect of doing business there.
Q.Are any British supermarket chains currently operating physical stores in the Philippines?
Are any British supermarket chains currently operating physical stores in the Philippines?
No, the article does not indicate that British supermarket chains like Tesco or Waitrose have physical stores. Marks & Spencer is present, but the article implies it established itself differently.
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