Making it in retail, the Gaisano way
If you can make it in Cebu, then you can survive anywhere in the Philippines.
That is according to Frank Gaisano, chair and CEO of Metro Retail Stores Group, who nevertheless admits that managing growth in the highly competitive and dynamic retail environment has never been more challenging.
To surmount these challenges, Metro Retail has been undertaking promising revenue-building efforts, more than a year after its successful initial public offering.
Last year, the company started expanding its store network and has secured more than 40 percent of its target sites that will double the size of its current store portfolio.
It expects to add more stores this year to achieve its earnings target.
Expanding in a volatile market where competitors are increasing and profit margins are low can be very risky.
But how does Metro Retail manage the risk and plan to rise above the competition?
Growing the core market to increase chances of success
Gaisano is pursuing a customer-focused growth strategy by growing its core market in the Visayas region, where Metro Retail currently enjoys a dominant position.
The Visayas is considered the fastest growing region in the country with an average growth rate of 8.9 percent per year.
“We are clustering more of our stores in the Visayas where most of our expansion will come from. In Cebu for instance, we already have 20 locations and we are still adding more. We are also going to the other islands such as Leyte, Samar, Panay, Negros,” Gaisano said.
Applying the clustering strategy will not only allow Metro Retail to focus its growth in a familiar territory but also enable them to administer their stores efficiently.
“With clustering, there is less stress on your people to move from one store to another. Supervision will be better if one person can cover two stores,” he added.
Tailoring to local demand
Developing an assortment strategy is more than selecting the products with the highest sales potential.
It is choosing the right mix of products that will not only include profitable items but also those that will attract customers to come to the store.
“You have to localize your store, what works in the Visayas for the same category may not work in Luzon. Let’s say on apparel, the brand that is number one in the Visayas may not be number one in Luzon,” Gaisano said.
“And from island to island, it differs again. You have to constantly make adjustments,” he added.
Getting the right people
Many companies make the mistake of promoting an employee who is not yet ready to handle bigger management responsibilities due to lack of skills or training.
“Our preference is to develop people from within, but sometimes we are never fast enough to develop those skills. We are also open to hiring outside. It’s a good to have cross pollination between tapping from the outside and growing your own talents,” Gaisano explained.
Hiring people from outside is not only about skills.
“They have to align with our culture. Some people may be very good in what they do but they may differ in how they work culturally that they may destroy your organization later on,” he added.
Being open to feedback
Great things happen when employees get to participate in discussions on how to improve work processes that lead to higher sales, cost savings and better employee morale.
Creating an employee suggestion program can provide huge benefits to the company if implemented well.
Investing in technology
In retail, having an efficient inventory management system is critical to success.
Not having enough inventory may lead to missed sales opportunities while keeping too much for so long may result in high opportunity costs.
“One of our major investments is technology. We are spending on technology non-stop to upgrade our system. Retailing can be a very complex business, but if you cut it into pieces like category by category, then it’s not that complicated,” Gaisano said.
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