Traditional stores in PH seen to falter

Retail sales from convenience stores and online shops are expected to grow by a much faster pace compared to that of the traditional and modern trade outlets, as the consumer landscape begins to shift in the years ahead, said TNS, a leading global market research and insights consultancy firm.

In a briefing Tuesday, TNS Asia Pacific managing director Tara Prabhakar said that, as of last year, retail sales in supermarkets had been mostly flat while sales in the traditional trade outlets, like sari-sari stores, even fell by 3 percent.

Prabhakar noted that the rising rate of urbanization—said to reach about 70 percent next year—would create more demand for convenience and smaller formats that would make it easier for consumers to carry out their shopping tasks.

In the same manner, the high rate of urbanization will also mean a huge amount of pressure on infrastructure and an increase in the cost of doing business.

For an owner, this would mean having to pay more to put up a store with a hyper format (supermarket type), and run the risk of not being able to get back as much as you have invested.

This may mean that it will make more economical sense to look at a smaller store format, Prabhakar explained.

At present, some 60-70 percent of the stores in the country are in the traditional format, or the sari-sari stores, said Simon Elsby, director of consulting at Kantar Retail, of which TNS is a part.

According to Elsby, the supermarkets will still grow as retailers and will continue to refine their offers.

However, there is a huge potential for an even bigger growth in the convenience format as well as the online platform, which is “under penetrated.”

Convenience stores, aside from providing ease of shopping, may also provide added value proposition such as new areas where the young can hang out, he said.

Proof of this expected growth, Elsby said, would be the new entry and expansion plans being sought by industry players such as Lawson, Family Mart, 7-Eleven, among others.

It was estimated that there would be some 5,000 convenience stores to be put up over the next several years.

This will result in a big change in the Philippine retail landscape, Elsby further said. Amy R. Remo