Ayala, Rustan’s plan dep’t store chain

Ayala Land Inc. will soon debut into the department store retailing format in partnership with the Rustan’s group by investing in the anchor tenant of a new Ayala shopping center rising in Fairview, Quezon City.

This will implement an earlier announced equal joint venture with the Tantoco family’s Specialty Investments Inc. (SII) to “pursue opportunities in the Philippine retail sector.”

ALI and Rustan’s are likewise investing in the 24-hour convenience store business under Japanese retailing chain FamilyMart, the world’s second-largest convenience store operator.

Although a late entrant in the high-volume but low-margin retailing business in department store and convenience store businesses, ALI is confident that having Rustan’s as a partner would create a “formidable” alliance that could effectively compete in this segment, said ALI chief finance officer Jaime Ysmael.

In a talk with reporters at the sidelines of the Securities and Exchange Commission hearing on foreign capital computation, Ysmael said ALI was now developing a new mall—Fairview Terraces—whose anchor tenant would be a department store co-owned by the Ayala-Rustan’s partnership. Typically, he said the anchor tenants in Ayala’s shopping centers would occupy about 10,000 square meters of retail space like Landmark (in Glorietta and Trinoma) or Gaisano (in Market!Market!).

“We haven’t come up with the name yet,’ Ysmael said, when asked what would be the branding for the upcoming Ayala-Rustan’s department stores. “Close to opening, that should be available,” he said. Parkview Terraces is expected to open by the end of next year.

This would not mean that ALI would no longer provide retail space to other department store operators in other upcoming malls, Ysmael said. “We will still have that kind of relationship with existing partners. It’s just that we want to put up our own so that we can move faster than that we’ll be able to do if we don’t have our own department stores. But those (other) stores will continue. They are longtime partners,” he said.

Ysmael said Rustan’s, apart from being the dominant retailer for the high-end segment, had a vast experience in the broader consumer market through its Shopwise grocery chain. “We’re confident that the partnership will be able to compete,” he said.

For the convenience store business, which is in partnership with FamilyMart and Japanese conglomerate Itochu, Ysmael said this should also be a “formidable” retail format.

The partnership is investing about P200 million to jumpstart the business. While the initial target is to set up 30 stores in the first year of operations, Ysmael said it should roll out “a couple of hundred stores to be able to make a difference.” As Ayala has hundreds of property developments across the country, Ysmael said the rollout should not be a problem.

“We’re positioning also in other areas, not just in our developments, but the priority is to locate in our developments,” he said.

ALI does not expect the fledgling retailing business to make a significant revenue contribution immediately, cognizant that a critical mass is needed. “We’re hoping that side of the business will move up but not right away,” he said.—Doris C. Dumlao