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Phoenix Petroleum, owned by Dennis Uy, is acquiring Circle K in the Philippines.

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SM Retail has announced Q1 results for the period ending 31 March 2019, with total revenue up 13% to PHP79.0bn.

Food revenue up 17% to PHP41.8bn

The food side of the business continued to see strong growth during the period, driven by positive like-for like sales in existing stores, as well as the opening of 1 SM Supermarket, 1 Savemore and 52 Alfamart stores. Although the retailer didn't open as many new stores in the quarter as it has done historically, it still plans to open 2 SM Supermarkets, 13 Savemore stores, 1 SM Hypermarket, 8 WalterMart stores and approximately 150 additional Alfamart stores throughout the rest of 2019.

Alfamart expansion an area of focus

The food side of the business at the end of Q1 operated 57 SM Supermarkets, 194 Savemore stores, 53 SM Hypermarkets, 52 WalterMart stores and 578 Alfamart's. Alfamart's rapidly expanding footprint is of particular interest, with sales from the format resulting in PHP2.8bn of revenue during Q1. The retailer is actively searching for new sights around the perimeter of Metro Manila, looking to build scale and market concentration in this area as a priority.

SM Retail and A.S. Watson’s joint venture, Watsons, will open 100 new stores in the Philippines this year.

Opening community-based stores

Of the 100 planned new stores, 80% will be community-based stores. The aim is to provide greater accessibility to shoppers as it recognises that not all shoppers go to malls. These stores will be approx. 200 sq m, with three quarters of the space used as a selling area.

Health and wellness growing alongside beauty

Watsons has been investing in growing its store network and training its pharmacists to grow its health and wellness segments alongside beauty. With shoppers beginning to follow beauty and health care trends more closely, the Philippines is a key market for further growth.

Watsons Philippines ended 2018 with 750 stores, and its network has seen a CAGR increase of 18.3% since 2015.

Robinsons has posted its annual results, with net sales up 15.1% to PHP132.8bn (US$2,556m).

Strong set of annual results

Robinsons posted net income of PHP5.1bn (US$98.5m) last year, an increase of 2.6% on the year previous. It achieved a 5.9% like-for-like (LFL) growth last year, mainly supported by a 6.1% increase in basket size in its supermarket business.

In its convenience store business, Ministop, sales increased 4.9% to PHP9,065m (US$174.5m) and LFL increased 5.1%. The retailer has cited shoppers increase in purchasing power driving growth.

Investment in Growsari

Robinsons Supermarket invested in Growsari Inc, a local tech start-up company that provides grocery delivery service to sari-sari stores.

Alignment in Rustan’s

The merger between Robinsons and Dairy Farm’s Rustan Supercentres Inc. last year has led to four key operational areas for review:

-       Merchandising: trading terms and other income, gondola rentals and other income

-       Human resources: headcount rationalisation

-       Supply chain and inventory control: shipping and trucking rates, distribution centre fees

-       Procurement: office supplies, air-conditioning units, refrigeration PM systems, managed print services, IT equipment

Robinsons and Rustan’s are currently still run quite independently and merger activity are still in early stages, but we do expect the businesses to integrate more closely over the next couple of years.

150 new stores this year

Robinsons will open up to 150 new stores in the Philippines this year, investing between PHP3bn to PHP5bn (US$57.8 – US$96.3m) on expansion. As of December 2018, it had 1,910 stores, including supermarkets, department stores, do-it-yourself stores, specialty stores, drugstores and convenience stores. Total network covered a gross floor area of 1.48m sq m.

Lazada, the leading ecommerce platform in Southeast Asia, owned by Alibaba Group, plans to expand its cross-border trade for international brands.

Global Collection 2.0

One of the key initiatives announced was a revamped “Global Collection”, which is a dedicated channel to showcase  Lazada’s cross-border merchants from around the world. The platform aims to help the brands grow their businesses and achieve higher visibility among the Southeast Asian shoppers.

Global Collection 2.0 uses an algorithm-based search function to filter the product offerings and highlight the vendors for shoppers to find them easily. Shoppers would also receive their deliveries much faster and within seven working days from the time their placed their order if they choosese the standard shipping option.

From April, cross-border sellers interested in joining Lazada can submit applications in the self-service system, instead of getting an invitation from Lazada. Once the review is completed, they will become Lazada merchants.

Lazada's cross-border ecommerce business

First launched in 2013, Lazada’s cross-border business has grown to become one of the most diverse marketplaces. The sales have quadrupled over the past three years and, with the aim of boosting sales further in 2019, the company plans to identify and nurture the top 300 brands in each of the six countries that it operates in – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. 

The top five markets which cross-border sellers come from are Mainland China, Hong Kong, Korea, the US and Europe, with women’s fashion, home and living and kids’ fashion ranking among the most popular cross-border items.

 

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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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