Traditional sari-sari stores still pose competition to big supermarket chains

Kantar Worldpanel findings

Unlike in other countries, the biggest supermarket chains in the Philippines are yet to fully capture the loyalty of Filipino consumers as most of them still prefer traditional trade or shopping from "sari-sari stores" and market stalls.

Kantar Worldpanel Philippines General Manager Alexandre Duterrage said that despite the rising income in the Philippines, Filipino shoppers still consider traditional trade (sari-sari stores and market stalls) as their number one shopping destination for fast-moving consumer goods (FMCG) products.

This was also despite the fact that there's now an influx of nearby hyper and supermarkets.

“Our research shows that while Filipino shoppers are embracing the expansion of hyper and supermarkets, they are still loyal patrons of traditional trade,” Duterrage said.

“Kantar Worldpanel’s Smart Shopper Study is a unique tool that allows retailers and manufacturers to understand where consumers are purchasing their FMCG needs and why they choose to patronize that particular channel. The combination of the actual data from our panel and the insights we get from our extensive interviews provides a wealth of information that help our clients craft their business strategies to boost growth,” he added.

He later on told reporters that "In 2018, the trend is expected to continue" and that "traditional trade will continue to grow."

In June, BMI Research, the research arm of the Fitch Group, came up with a study showing that rising household income in the country is expected to translate to a growth of 5.4 percent in consumer spending between 2017 and 2021.

According to them, household spending is even set to increase at a yearly average of 9.3 percent to R16.6 trillion in 2021 from the projected R11.7 trillion this year.

Meanwhile, the latest Kantar Wo r l d p a n e l ’ s S m a r t S h o p p e r r e search, an annual study that delves into the opportunities and challenges for shopping channels and retailers across nations globally, showed that traditional trade in the Philippines enjoyed 46 percent of total value contribution to FMCG sales in 2017, while hyper and supermarkets accounted for 30 percent.

The study also revealsed that Filipino’s FMCG purchases in drugs stores are on the rise with its shopping frequency growing steadily from 12.8 times in 2016 to 13.4 times in 2017, and spend per trip increasing from R187 to R198.

While traditional trade proves to be the top option for Filipino’s FMCG shopping, five retailer accounts are seen to be the powerhouses of FMCG sales.

Puregold, SM, Robinsons, Mercury Drug and Gaisano collectively contribute to 15 percent of total FMCG sales in the local market, said the survey results.

The fastest growing retailer among the five powerhouses is Mercury Drug, which posted a 19 percent value change growth in 2017. Gaisano follows closely, with a 15 percent value change increase.

Hyper and supermarket giants Puregold and SM grew by five and two percent, respectively, while Robinsons posted a seven percent decrease in value change.

When asked about what they consider the most important factors when shopping in retailers, Filipino households ranked accessibility of location as their top priority.

In terms of product range and layout, the study shows that Filipinos prefer retailers that have large choices of brands/types/sizes of products.

"Filipino shoppers also prioritize retailers that make them feel like they’re spending their money wisely with good price points and promotions. They also tend to patronize retailers that help local manufacturers and their fellow Filipinos," Kantar said.

Kantar Worldpanel is the global expert in shoppers’ behavior.

With over 60 years’ experience, a team of 3,500, and services covering 60 countries directly or through partners, Kantar Worldpanel turns purchase behavior into competitive advantage in markets as diverse as FMCG, impulse products, fashion, baby, telecommunications and entertainment, among many others.

Duterrage said that in other countries the region, there is now a rise of modern trade as there is now a growing market for online commerce or e-commerce.

"This model will not apply [yet] in the Philippines," Duterrage said. "I would say that Filipino buyers are adventurous that way."