2018 RETAIL ASIA-PACIFIC TOP 500
OVERVIEW the Internet via their phones .
Improvements in logistics and payment services will strengthen the expansion of e-commerce to rural areas in Thailand , with consumers eager to access new brands and products that are not available in their villages . Cross-border e-commerce will also gain prominence for the same reason , besides consumers wanting to access more competitively-priced products , such as from China . While Internet retailing will continue to grow , most consumers still prefer to see and feel products in stores before purchasing . This in turn will sustain the performance of store-based retailing in the forecast period . That said , investments to rejuvenate stores , be it for store décor , the launch of new shopping concepts or to bring in new brands and products , will be key for store-based retailers to succeed in the forecast period .
— Jocelyn Cheung , Senior Analyst
THE PHILIPPINES
2017 was a good year for retailing in the Philippines The sustained strong economy in the Philippines led to an increase in consumer spending , which was felt across all retail channels . 2017 was a good year for retailing in the Philippines , as the majority of key players increased their outlets and sales , brands emerged to provide more options for Filipinos , and companies continued to improve the shopping experience , with a special focus on convenience . Retailers also benefited from more frequent shopper visits , the continued growth in the basket size and the increasing preference for premium and discretionary items .
The improving economy specifically increased the incomes of the middle-classes ( who can now afford more products and services ), workers ( particularly those in Business Process Outsourcing ), families receiving remittances from overseas Filipino workers , and the younger population , who are ready to explore new options in retailing . The next huge growth will come from the millions of new workers . Some five million new jobs were created over the last five years , and there were more Philippinebased millionaires and billionaires created in the last decade than over the last 50 years . As retiring expatriates return to the Philippines , this list of millionaires will triple , seemingly overnight .
A move into underserved markets Retailing is definitely growing , but is still far from saturated in the Philippines . There remain huge and potentially lucrative untapped opportunities across the industry . Despite aggressive expansion , modern grocery retailers are still only present in around 30 % of the Philippine market . This remains one of the lowest figures in Asia , and presents an opportunity for retail companies to expand , especially to locations outside of Metro Manila . The common trend among the country ’ s largest retailers is now to expand outside this area to tap into the underserved markets in the provinces . In 2016 , 80 % of SM Retail ’ s store openings were outside Metro Manila . 7-Eleven , the country ’ s largest convenience store chain , is also aiming to penetrate new territories outside Metro Manila . It is set to open 124 stores in Luzon outside Metro Manila , and 150 branches in Visayas and Mindanao . Even newcomer Alfamart started its business operations in towns south of Metro Manila , as the city is already too crowded . Another key player , Robinsons , also reported new store openings located outside this area . These companies are aware that these regions are exhibiting increasing purchasing power and spending .
Convenience stores continue to increase in popularity Grocery retailers , particularly smaller formats such as convenience stores , continue to drive overall growth in retailing . This trend is driven by the increased demand from consumers who want more convenience in their grocery shopping . The shift towards urban lifestyles also calls for more convenience stores in every town and city across the Philippines , as well as in every business district , especially those with high demand for 24-hour service . To address this increasing demand , a number of new players started entering convenience stores in the Philippines . The only significant players were 7-Eleven and Ministop until 2013 .
Now new brands are entering the market , usually global brands brought in by local partners , such as Rustan Group ’ s Family Mart , Puregold Price Club ’ s Lawson and SM Retail ’ s Alfamart . Alfamart has high potential to change the competitive landscape in convenience stores , as it is more than just a convenience store . It is considered as a minimart , which is a hybrid of a supermarket and a convenience store . It adopts the pricing strategy and product assortment of supermarkets , while it follows the store size and presence of convenience stores . Unlike a traditional convenience store , it also offers basic goods , fresh meat , poultry and vegetables packed in smaller sizes . Given these differences , Alfamart is introducing something new to the market , and other convenience stores players should answer this call .
The development of e-commerce The Department of Trade and Industry launched the Philippine E-commerce Roadmap 2016-2020 , with the main goal of boosting e-commerce in the country , aiming for it to contribute 25 % of the country ’ s GDP . Most retail companies also recognise that everything is moving online , and they have started testing their own e-commerce platforms . Some have set up e-commerce functions on their existing websites , such as : SM Department Store and SM Appliance ; the majority of direct selling companies , including Avon and Amway ; Mercury Drug ; and a few grocery retailers , such as Waltermart Supermarket . Other companies have chosen to partner with established e-commerce websites such as Lazada and Zalora , including Robinsons Retail Holdings .
Internet retailing has varied efficacy according to the channel . There are specific niches in retailing in which e-commerce performs well , and there are some channels in which e-commerce remains irrelevant . Internet retailing in general still needs to overcome a number of challenges and barriers , such as creating an efficient logistics system , the unbanked population , and building trust among shoppers , before it can fully penetrate the market .
Positive prospects for retailing Retailing in the Philippines continues to grow , seeing higher current value growth in 2017 than in 2016 , and this presents opportunities for retailers to continue expanding . The positive economic performance in the Philippines is not exhibiting any immediate signs of waning , which ensures that the demand for more retail supply will be sustained . However , there are some impending changes which could greatly affect the competitive landscape once they take effect . Tax reform , for example , will
54 Retail Asia June / July 2018