A not-so-merry Christmas?
By Tina Arceo-Dumlao
Philippine Daily Inquirer
First Posted 21:07:00 10/12/2008
Filed Under: Economy, Business & Finance
JUST when you thought that the erratic global stock markets had reached their bottom, and optimism had again worked its way back into the spooked investors’ vocabulary, they plunge again … and again … and again …
There are precious few signs that the steep and steady declines will stop anytime soon and the Philippines has not been spared from the bloodbath.
Share prices at the Philippine Stock Exchange have lost more than 30 percent of their value since the start of the year and the pall of gloom has led many retailer companies to expect with much trepidation that Santa Claus may not be coming to town this year.
Or even if he is, given the Filipinos’ love for the Christmas shopping season that accounts for about a fourth of most retail firms’ annual revenue, his sack of presents may be not as big as last year’s.
But then again, there are eternal optimists who believe that despite the pressing global issues, shopping will go on.
To get a better idea of how the Christmas season will likely turn out, Business Monday got in touch with a number of the leading experts in the retail industry who shared their views on the turmoil in the financial markets that promises to drastically cut budgets for gifts this year.
“I don’t think Christmas will be good for the retailer this year. While they say Asia won’t be as affected, we know that when America sneezes, we catch pneumonia. Our hope is that the OFWs, our heroes, do not get affected. In general, people will be more prudent about spending, buying only what is needed and doing away with the rest.”
—Cecilia Ramos-Licauco, National Book Store vice president for purchasing
“I expect Christmas to start late this year given the economic conditions. But shopping will still happen given the importance of Christmas to the Filipino shopper. Next year, cautious spending and belt tightening will continue.”
—Rowena Tomeldan, head of commercial centers group of Ayala Land Inc.
“The changing economic environment and the current global financial crisis have definitely put a strain in our business. We are not exempted from feeling the effects of the skyrocketing prices of goods and services, and changes in consumer’s purchasing power, especially among the middle- and lower-income class. More consumers today opt for other less expensive places to eat like rolling stores and bakeries. This is why at McDonald’s, we do our best to manage our operational costs so our prices do not change significantly in short periods of time and retain our customer base.
This coming Christmas season, we are very optimistic that our sales will grow even stronger. This is that time of the year wherein people treat themselves out more often and celebrate the spirit of the season, and we have seen an increase in spending since September. We are also confident with our marketing offers and campaigns that promote the great tasting food that McDonalds provides its customers at affordable prices.”
—McDonald’s Philippines
“I think Christmas sales will not be as good as last year. Our market consists of the upper echelon of society. These people would obviously be affected by the substantial drop in equity values and the global financial turmoil. I am sure all of their investments are taking a beating and would definitely affect buying sentiment. That said, there could be people who will decide to buy luxury cars instead of losing more value in the financial markets. They could think, instead of losing it in the financial markets, might as well spend some money and enjoy it.”
—Gregorio Yu, chair
of Mercedes Benz distributor Cats Motors Inc.
“We see a conservative growth in sales this year versus last year as customers are believed to be more selective in their toy shopping and will be looking for ways to stretch the peso. However, most experts agree shoppers will cut back on gifts for adults before they reduce buying toys for children. The effect of the global turmoil will most likely be more evident when shoppers start making purchasing decisions. Already faced with high food and gas costs, the turmoil in the financial sector could further spur shoppers to cut their spending and be selective in their toy shopping, focusing on less-expensive toys and considering toys with value. People will definitely work on a budget this year and are inclined to stay within this budget. As for categories, interactive toys and gaming consoles like the Nintendo Wii will remain popular. A preference for relatively inexpensive toys will prevail.”
—Celina N. Chua, Toys R Us general manager
“I started my business over 10 years ago at the beginning of the Asian financial crisis. So far, I have seen better gross sales every year during the Christmas season. I don’t think that will change this year. My customers tend to be price inelastic and are cognizant and accepting of the rising costs.”
—Noye Fandino, owner
of bread manufacturer Village Gourmet
“Optimistic to have more sales than or at least equal that of last year because the brand is now available in more areas nationwide compared to 2007, so there are new markets and customers. The crisis may affect us in that customers might cut down on the number of pairs they buy or may opt for lower-priced ones.”
—Anne Gonzalez, owner of Havaianas distributor Terry SA
“At French Baker, we are still hopeful that Christmas sales will still be strong because of tradition and introduction of new products. We will soon launch our 100-percent grain wheat bread, the purest whole wheat available in the market with the lowest glycemic index or GI for diabetics and weight watchers. Also, our new dining menu format will be introduced and will be adopted by a majority of our stores. Finally, there is a good chance that bread prices may be rolled back as a result of a dramatic flour price adjustment by November as promised by local flour millers.”
—French Baker CEO Johnlu Koa
“We still see an upward trend this year because with more quality choices for consumers, prices are generally going down. We continue to be aggressive in terms of expansion to respond to the growing demand for investment appliances. But the global turmoil will have a significant effect on our business, especially on growth projects. People will be more price-conscious and would want to defer purchases of appliances. But then again, with a more aggressive and a more attractive pricing scheme, we are sure that customers will be able to fit our products into their budgets.”
—Ryan Benneth Sison,
general manager of Robinsons
Appliances
“We are experiencing a 10-percent growth in our shopping center revenues and 12-percent increase in the bottom line thus far this year. Oil and food crises in the second and third quarter and the Wall Street meltdown will definitely impact on local Christmas shopping in general. We, therefore, see for the industry a flat or even slightly down Christmas versus last year. But Greenhills and Tiendesitas have their unique value propositions and we, therefore, expect the 10-percent growth experienced in the first eight months to hold until the end of the year.”
—Rex C. Drilon II, Ortigas and Co. COO
“Surprisingly, sales are up versus last year. Topping the ranks are food service, clothing, shoes, home furnishings and appliances.”
—Belle Beldoza, public
relations officer for Araneta Center
“As of now, we are still hopeful that we will have better sales these next three months compared to last quarter, especially since we launched so many new models of cameras and printers. This is despite the global turmoil,”
—Canon Philippines CEO
Ramon Arteficio
“As expected, Christmas is the peak season for Goldilocks. In fact, our company has become almost synonymous with this special occasion. Thankfully, our sales have always increased from year to year, and we expect this trend to continue. No matter how challenging the times may be, will always have a reason to celebrate and to thank God for the blessings He showered us throughout the year. Although there has been a recent downturn in world markets, I believe that Filipinos will exhibit grace under pressure. And in fact, our country has been largely spared from the economic slump. Part of what makes us Pinoy is the incomparable manner in which we commemorate our Savior’s birth and I don’t think that will change that easily.”
—Goldilocks marketing
director Pinky Yee
“We cannot deny the fact that what is happening worldwide will have an impact on us. However, Christmas is a celebration that is part of our lives in the Philippines and we hope that this will be a good year.”
—SM group vice president Millie Dizon
“For PC sales, fourth quarter sales are generally less than previous quarters because of Christmas spending on lower-priced items. Yes, the global financial turmoil may affect consumers’ purchasing power. The highest cost of living affects spending behavior.”
—Acer marketing manager Agnes Espino
“I guess there is going to be a great struggle for the consumers’ wallet. The lower disposable income, the worse it is going to be. A good reason to be positive is that projected OFW remittances will, at least, remain steady in an appreciating dollar situation, meaning more pesos to spend compared to last year.”
—Chito Macapagal of Unilever
“Sales will surely be down due to the global turmoil. The unstable price of crude oil and the dollar value will be the main factors. If the dollar continues to surge, all commodity prices will go up, buying power of consumers will decline. Consumers are more conscious about their buying priorities. Sales in the third quarter are 25-percent down compared to last year. The financial crisis in the United States might worsen and the recession will thus affect the world market. The OFWs in the US will further cut their remittances.”
—Steven Ching, owner of children’s toys and apparel distributor Characters Inc.
“Sales will probably decline due to consumer belt tightening.”
—Bienvenido Bautista, senior vice president of Universal Robina Corp.
“Sales will be definitely lower as most people will cut on spending out of necessity. But, all will still celebrate Christmas even in a reduced way.”
—Roberto Claudio, owner of Toby’s sports shops
“Based on recent sales figures, we think that the industry can hit its forecast of 125,000 units this year, which is higher than 2007. As of September, we have registered a 12-percent growth year to date. As to the effect of the global turmoil, we will still have to see if it will have a direct impact on the last quarter sales.”
—Homer Maranan, executive director of the Chamber of Automotive Manufacturers of the Philippines Inc.
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