The feared demise of traditional retailing, which seems to be starting in the United States, Europe and China as a result of booming online shopping, may not happen in the Philippines in the next five to 10 years, but it is a future possibility that SM Investments Corp. (SMIC) is preparing for, the chair of the country’s largest conglomerate said.
Jose Sio—chair of SMIC which is the dominant player in retailing, property development and banking in the Philippines—said the group’s investment in the logistics business was a way of future-proofing the conglomerate.
“This is the future business that we see. This is happening in the US now and it is happening in China, in Europe. Retailing will be gone,” Sio said in a forum with the Federation of Filipino Chinese Chambers of Commerce & Industry on Wednesday night.
Last year, SMIC paid $124.5 million to acquire a 30.47-percent stake in leading logistics provider 2GO Group Inc. through its privately held parent firm Negros Navigation Co. Inc. 2GO is the country’s largest integrated supply chain operator whose businesses include shipping, freight forwarding, warehousing, and express delivery services.
This is seen giving the SM group a logistics backbone if and when online shopping, which still accounts for a small share of consumer spending now, picks up pace in this market. The group entered this business as a partner of Davao-based tycoon Dennis Uy.
During the open forum after his presentation, Sio was asked about the possibility of traditional retail trade dying in the future.
In the US, a number of once-venerable fashion houses and big shopping malls closed shop amid the rise of online shopping.
“In the Philippine environment, we don’t see this happening in five or even 10 years, because our market is not yet in that environment,” Sio said.
“There is now a concern. Should we continue to encourage it? Don’t we see the social problem that it’s creating? What will happen to millions of people that will be out of work? What will happen to the small businessman that will be out?”
Sio said it was beyond SM to stop new technology. However, he said it was better to accept it and “do something about it,” adding that SM group was ready to face such possibility.
In his presentation, Sio said even the banking landscape would change in the next five years. “Branches will be out. Will it happen in the Philippines? We don’t know, but it will will come,” Sio said.