FamilyMart eyes growth outside Luzon

MANILA, Philippines–FamilyMart, the global chain of convenience stores from Japan, is out to capture a chunk of the convenience store business in the Philippines and will expand its retail network in five key areas outside Luzon.

According to Ed Paredes, general manager of FamilyMart, the company is currently studying the market in Cebu, Bacolod and Iloilo, after which they will look into Davao and Cagayan de Oro as possible areas of expansion, whether through franchising or company expansion.

The plan is to start the expansion in the Visayas by next year, Paredes said Tuesday night.

According to Paredes, FamilyMart targets to have at least 60 percent of the 500 stores they target to open by 2018, to be located outside Metro Manila. Currently, there are 65 FamilyMart branches, all backed by the Philippines’ largest specialty store retailer SSI Group Inc., property giant Ayala Land Inc., Japan FamilyMart Co. Ltd. and Itochu Corp.

There is still a huge room for expansion in the convenience store segment, as the Philippine market can readily absorb as many as 10,000 of such stores, Paredes said, citing studies. There are only three to four big companies servicing this segment with roughly 2,000 convenience stores.

To fast-track the company’s five-year expansion plan, FamilyMart has formally opened its doors to franchising Tuesday night, enabling prospective franchisees to throw their questions during the launch.

Paredes explained that the franchising process would begin with the submission of a letter of intent by an interested entrepreneur or company. The applicant will then undergo a series of location market studies, reviews of contract and interviews, after which he or she pays for the franchise package estimated between P4 million and P8 million.

The franchise fee will include operational rights of the store, leasehold improvements, equipment, initial merchandise inventory and contingency fee. After a formal agreement is reached, franchisees go through a four-week intensive training through a full-time program that involves classroom and hands-on in-store training.

FamilyMart’s support for its members goes beyond the store setup, opening and training, as it will provide assistance through various channels such as distribution center, area manager’s assistance, system-wide marketing and product development.

Depending on a branch’s performance, payback period would be between four and six years, Paredes said.

At least 15 percent of FamilyMart stores are hitting P100,000 in daily sales, half of which are contributed by the ready-to-eat items, he added.