Study reveals sari-sari stores help Filipinos amidst inflation

WHEN inflation soars high, sari-sari stores run low, providing a lifeline of essential services to around 94% of Filipinos nationwide.

This is the key finding from the Sari IQ Year-End Report for 2023 released by Packworks, a Filipino startup offering a business-to-business (B2B) FMCG marketplace for sari-sari stores, in its snapshot of the state of the grassroots retail sector in the country.

The report reveals that contrary to expectations, sari-sari store sales trends are not directly driven by inflation. Data showed that the month-onmonth (MoM) growth in gross merchandise value (GMV) was not correlated with the country’s MoM inflation rate. Instead, it seems to be more driven by occasions, as most of the peaks in the trend recorded coincide with major occasions with long breaks, such as the Christmas season and Holy Week.

For instance, despite the MoM inflation rate hitting 6.6% for April 2023, which coincided with Holy Week, sari-sari stores showed resilience, with MoM sales growing by 14.4% - significantly above the inflation rate.

Andoy Montiel, Packworks’ Chief Data Officer, weighs in on the report finding, “The Philippines’ unique sachet economy plays a pivotal role in the resilience of sari-sari stores amidst the challenges of an inflationary economy. It enables the sale of goods in small, affordable units, ensuring that essential products remain within reach for the average Filipino, even as inflation rates fluctuate.”

In addition, Montiel underscores the significance of the sales increase in sari-sari stores during special occasions, attributing it to their deep cultural roots within their communities and their adaptability in meeting the demands of corresponding observances.

“The stores’ resilience, even amid inflationary pressures, lies in how they are embedded in the fabric of the community’s way of life, reflecting a symbiotic relationship between the stores and their customers. More importantly, it shows how stores display agility in their inventory and operations to cater to the heightened demands of these seasons, further reinforcing their role as indispensable components of community life.”

Meanwhile, the report suggests that sari-sari stores continue to serve as the neighborhood pantry, with key categories recording growth in demand regardless of the occasion. Products with the highest sales include instant noodles (159%), ready-to-heat (221%), recipe mix (117%), and ready-tocook (42%). /