Smaller SM groceries heat up retail wars

SM group-led grocery chain Savemore has introduced new stores with half the footprint of its regular stores, or even smaller, to make more inroads into local communities amid cutthroat competition and changing preferences of consumers.

In a press statement on Friday, Savemore said the launch of the new brand called Savemore Express applied key lessons learned during this prolonged pandemic.

During the long lockdowns, the retailer observed that community food stores have served as the essential destination for people, while households have increasingly turned to home cooking as people spend more time indoors.

Acknowledging that there may be a shift in domestic consumer preference, the new format called Savemore Express is seen to be more versatile in delivering essential goods to customers because of its smaller size of about 1,000 square meters (sq m), compared to a regular Savemore store, which typically occupies a selling space of 1,500 to 2,500 sq m.

Savemore Express aims to provide the weekly grocery needs of communities and offer an expanded line of fresh merchandise. It will sell commonly used produce, frozen meat, poultry as well as a selection of prepared or ready-to-cook products from popular local brands, which Savemore said would support micro, small and medium enterprises (MSMEs).

The assortment will also include basic and essential food, personal care and household products.

To date, nine Savemore Express stores have been rolled out, mostly in commercial areas in Albay, Valenzuela and Bulacan.

“Similar to how our other formats came to be, we are always finding ways to meet the ever-changing needs of our customers. This has been more so during the pandemic, with the heightened need for safety and practicality and as people relied on local neighborhood stores for their food and other essentials. We assume that these habits will remain even beyond the pandemic and Savemore Express was conceived to support this emerging shopping trend,” Savemore Market president Genevieve Manalad said.

Manalad said Savemore would open eight more Savemore Express stores to cater to more communities in 2022.

“SM Savemore’s strategy is in line with other leading grocery retail companies like Puregold Price Club and Robinsons Retail Holdings Inc. These grocery retailers are shifting gears away from the typical store footprint of 1,500-sqm and up to those less than 1,000-sqm in order to adapt to the changing consumer needs brought about by the pandemic,” said COL Financial Justin Cheng.

“This gives big retail companies more flexibility in catering to the needs of specific, smaller communities. Other retail companies have shared that this new model is quite effective and efficient, and they have generated good volumes from bringing their stores closer and more accessible to smaller communities. The smaller format stores have also generated better margins compared to existing larger format stores,” he added.

As of the first nine months, SM Markets — the umbrella brand for SM Supermarket, SM Hypermarket and Savemore — and its sister company, Alfamart, operated 1,529 stores. There are currently 206 Savemore stores, nine Savemore Express stores, 60 SM Supermarket stores, 53 SM Hypermarket stores and 1,201 Alfamart branches.

As a group, SM remains the biggest retailer in the country, although a number of other retailers — especially those catering to the pandemic-proof essential formats, such as grocery chains and drug stores which are allowed to operate during lockdowns — have been aggressively expanding as well. Pop-up neighborhood stores operated by small groups have also sprouted in various communities.