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South Korean discount chain operator Emart signed an agreement with the local retailer Robinsons to launch two of its private labels in the Philippines.

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Robinsons, one of the leading grocery retailers in Philippines, reported a 9.8% increase in net income in the third quarter of this year.

Robust like-for-like growth

The growth is attributed to opening of new stores as well as robust like-for-like sales growth, which is up by 6.6% vs. the same period last year.

Good performance across all formats

Good performance can be observed across all Robinsons’ formats, in terms of like-for-like growth:

  • Supermarkets sales up by 8.6%
  • Speciality store sales up by 7.8%
  • Convenience stores sales up by 4.5%
  • Drugstores sales up by 2.9%
  • Department stores up by 2.4%

Supermarkets account for 46.5% of the group’s total turnover and also have the fastest growth rate of all formats. Earlier this year, the acquisition by Robinsons of a 100% stake in Dairy Farm’s Rustan Supercenters has been approved by the Philippine Competition Commission, and the deal is currently being completed.

Up to date, Robinsons has 158 supermarkets, 368 speciality stores, 496 convenience stores, 499 drugstores and 51 department stores. Robinsons’ overall floor area increased by 9% year-on-year.

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Traditional stores go by many names: mom-and-pop stores, kiranas (India); warung (Indonesia); kedai runcit (Malaysia); sari-sari (Philippines). They include markets, street vendors and kiosks, and are a major feature of Asia’s grocery retail landscape. 

They’re also the specialist subject of Johann, one of our Singapore-based senior retail analysts. We asked Johann for his views on the traditional channel and the opportunities it presents for suppliers.

Q: How are traditional stores making themselves stand out? 

A: They’re known for providing the freshest produce. In fact, the traditional channel began when farmers’ markets started selling excess produce directly to consumers. Stores prepare products – like cheese – freshly every day or offer ranges shoppers can’t find elsewhere.

Offering personalised service is another way to be distinctive. Many traditional stores serve a small catchment area, so owners inevitably get to know their shoppers well. They can then offer advice, product recommendations and value-added services like free home delivery.

Q: What do shoppers like about the channel?

A: As well as the above, many shopkeepers are willing to sell loose products in smaller quantities. We’ve seen this flexibility across many product categories – rice, spices, dried goods, vegetables, biscuits, snacks. 

Shoppers can buy what they need, manage their spending and reduce wastage. It can also encourage them to sample a wider range of products. So, if you supply traditional stores, you should consider whether you can help provide this level of choice. 

Q: How does traditional trade compete with the rise of online shopping? 

A: It’s quick to recognise the benefits of modern innovations and adopt them to attract shoppers. In India, banks are giving traditional shopkeepers handheld payment devices that operate on a mobile network. In China, stores and even market vendors are increasingly accepting cashless payments by displaying a QR code. 

Traditional retailers are also improving their in-store environments. In Malaysia, we’ve seen stores with spacious, clutter-free aisles and attractive displays. Some stores in India have upgraded to include air-conditioning, bright lights and electronic tills.

Q: What’s the outlook for traditional trade in Asia?

A: Traditional trade forms 79-98% of the grocery market in Indonesia, India, the Philippines and Vietnam. We forecast that by 2022 it will still dominate these markets. 

However, the growth rate varies greatly across the region. We expect it to decline in Singapore and Japan over the next five years. 

Q: What’s the one thing suppliers need to know about the channel?

A: Traditional trade remains a vital part of Asia’s grocery retail market. You’ll need to continue investing in it, as it’s here to stay. 

Subscribers to IGD Asia can find more examples of best practice in traditional trade here

Asia’s FMCG market is the largest in the world, making it the number one growth opportunity for suppliers and retailers. We can help you trade successfully in Asian markets, and benefit from this growth, with our new IGD Asia service.
 

Dairy Farm announced in early October 2018 that it has agreed to acquire the remaining 51% interest in Rose Pharmacy from BRG Realty Corporation.

Full control of the pharmacy chain

Dairy Farm bought a 49% interest in Rose Pharmacy to broaden its health and beauty offering. The announcement is conditional on the approval of the Philippines Competition Commission and completion is expected to take place within the next six months. Upon completion of the transaction, Dairy Farm will hold 100% of Rose Pharmacy.

Growth through health and beauty

The company’s decision to invest further in this area does not come as a surprise. In its 2018 half year report, health and beauty is highlighted as one of the key growth areas. In the Philippines, its integration of Rose Pharmacy started to yield positive results, whilst the food business continues to face challenges. In March 2018, Robinsons announced to acquire Dairy Farm’s Rustan’s in the Philippines (see full report here).

One of the Philippine’s largest pharmacy chains

Established in 1952 in Cebu city, Rose Pharmacy currently has over 250 branches in Philippines. To meet today’s shopper needs, Rose Pharmacy also offers online shopping, phone ordering and home delivery.

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The Philippine Competition Commission (PCC) has approved the merger between Robinsons Retail Holdings Inc. and Dairy Farm's Rustan Supercenters Inc.

Merger approved, deal to be completed soon...

The acquisition by Robinsons Retail Holdings Inc. of a 100% stake in Rustan Supercenters Inc. has been approved by the PCC, and the deal is now expected to complete in the next couple of months. The acquisition comes without any conditions as the PCC noted competition would not be substantially reduced in the market.

Third largest retailer when combined

Last year, Dairy Farm acquired the remaining 34% share of Rustan’s Supermarket. In March, however, Robinson's announced that it agreed to partner Dairy Farm. The transaction involves exchange of Rustan’s for a 18.25% stake for Dairy Farm in Robinsons - becoming the third largest retailer in the country when combined. From the deal, Robinsons will acquire Rustan’s Supermarket, Shopwise and Wellcome, different supermarket and grocery banners which cater to different shopper segments.

 

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This in-depth guide to the Philippines explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

Five year growth forecasts for the grocery market, the leading retailers and modern trade grocery channels in the Philippines.

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