Ayala Land, SSI mull options on FamilyMart

FACEBOOK PHOTO/FamilyMart Philippines

The retail venture between property giant Ayala Land Inc. and SSI Group Inc. is looking at various options to shore up the Philippine convenience store chain under the FamilyMart brand amid cutthroat market competition.

In a disclosure to the Philippine Stock Exchange on Monday, ALI said SIAL CVS Retailers Inc. was “currently exploring various options intended to strengthen and grow the business of Philippine FamilyMart CVS Inc.”

The disclosure was made in reaction to an Inquirer report that the convenience store chain – which has around 72 stores in the Philippines to date – had been offered to prospective investors in recent months with the help of foreign investment houses UBS and Credit Suisse.

“No definite course of action has been finalized and appropriate disclosures will be submitted to the PSE in a timely manner,” the disclosure said.

SSI issued a similar statement in a separate disclosure on Monday.

“In relation to its core specialty retailing business, since 2016, SSI has been implementing measures intended to maximize the efficiency of its store network. Further to these measures, the company has seen a return to growth which is reflected in SSI’s first half 2017 results,” SSI said.

The prospective sale of the local FamilyMart chain is seen to signal a shakeout in the highly-competitive local convenience store business. Another source earlier suggested that ALI – which owns office and commercial space where some of the most prominent FamilyMart stores are located – may opt to keep its stake but the partnership structure may change.

In 2012, ALI and the Rustans group via their equally owned joint venture firm SIAL CVS Retailers Inc. signed a deal with FamilyMart Co. Ltd. and Itochu Corp. for the development and operation of FamilyMart convenience stores in the Philippines.

Competition has heated up in the convenience store business in the last six years with the entry of new brands that sought to challenge the two leading players 7-Eleven and Mini-Stop, respectively run by Philippine Seven Corp. (PSC) and Robinsons Retail Holdings Inc. (RRHI).

Aside from Family Mart, the Puregold group also brought another foreign brand Lawson into the local market while the SM group brought in Indonesian brand Alfamart. Real estate magnate Manuel Villar, for his part, has also built his own convenience store network using his own brand “All Day.”

To date, 7-Eleven and Mini-Stop remain the leading market players. 7-Eleven has breached the 2,000-store network while Mini-Stop has at least 500 stores.

Elsewhere in the Asian region, only the top two players in the convenience store business tend to be profitable due to the intensity of the logistics requirements, which drive returns to scale.