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Monday, October 23, 2017 | MANILA, PHILIPPINES
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Date posted: Friday, December 11, 2015 | Manila, Philippines

Wholesale and Retail Trade

Consumer resilience draws foreign brands

THE GROWING PRESENCE of foreign brands and products in the local market has made the Philippines a shopper’s Mecca. The country’s solid macroeconomic fundamentals, coupled with a growing middle class, have drawn foreign retailers to the Philippines’ burgeoning commercial districts.

A case in point is the Philippine venture of Japanese retail giant UNIQLO. According to Fast Retailing Philippines, Inc., its move “will reinforce UNIQLO’s rapidly growing retail presence in Southeast Asia,” following its entry into Thailand, Malaysia and Singapore the prior years.

A joint venture of Japan’s Fast Retailing Co., Ltd. and SM Retail, Inc., the company has been operating the UNIQLO chain of retail stores in the Philippines since 2012 when it first set up shop in SM Mall of Asia.

Since then, Fast Retailing Philippines has opened 24 stores offering its line of apparel, footwear and accessories. During President Benigno S. C. Aquino III’s Japan visit last June, Fast Retailing Managing Director Katsumi Kubota said the company plans to open “somewhere between 100-200” stores over the next five years.

Mr. Kubota’s optimism is well-founded. Fast Retailing saw its gross revenue in 2014 balloon 130% to P2.98 billion from the previous year’s P1.30 billion, allowing the company to join this year’s Top 1000 Corporations and land at No. 652. Its gross profit margin in 2014 stood at 49.5%, down from the previous year’s 52.4%.

The specialty retailer is among a growing number that are cashing in on the Filipinos’ propensity to consume. The trade sector’s gross value added increased by 5.7% to P1.18 trillion last year, albeit slower than the 6.2% growth in 2013. Similarly, household expenditure, which accounts for nearly around 61% of the country’s gross domestic product, increased by 5.4%, slowing from 5.6% in the year before.

Retail, which comprises shops, department stores, stalls and other establishments that resell merchandise and account for 80% of total trade performance, grew 5.1% to P947.85 billion, slower than the previous year’s 6.8% year-on-year growth.

Wholesale, meanwhile, grew by 8% to P198.85 billion in 2014 compared to previous year’s 3.4% print.

Of the 246 trade companies included in this year’s list, 144 were wholesalers and 102 were retailers.

Mercury Drug Corp. remained the sector’s top grosser this year, followed by Chevron Philippines, Inc. and Puregold Price Club, Inc.

The Philippine economy has long been characterized as consumption-driven with remittances said to be supporting household spending. Remittances in 2014 grew 8% year on year, with the central bank attributing this to “strong demand for skilled Filipino manpower.”

The substantial contribution of wholesale and retail trade is unlikely to change in the near term. Apart from malls and specialty retail outlets, convenience stores have been sprouting in recent years, as foreign players team up with local companies. This year saw Japan’s Lawson Asia Pacific, Inc. team up with Puregold and Indonesia’s Alfamart venture with the SM Group. They add to a three-cornered fight among 7-Eleven, Ministop and relatively new player FamilyMart. -- Leo Jaymar G. Uy


*Send e-mail to Leo at lguy@bworldonline.com or follow him on Twitter @leouy037.

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