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Retail Sector in Philippines

Retail trade in the Philippines has blossomed recently. The Philippine National Statistics Office counted 437,325 establishments engaged in wholesale and retail trade in 2000, with the industry employing over 1.7 million people. Retail sales in 2002 amounted to 1,692.3 billion pesos (approximately US$30 billion), an 11.1% increase from 2001. Most retail stores in the Philippines are small, home-based, unregistered, and employ a staff of less than 10 people, with food retail outlets comprising about 65 percent of the total number of outlets. Thirty percent of the country’s total retail sales are concentrated in metro Manila.
The Retail Trade Nationalization Act once confined retail trade to Philippine nationals. However, recently the Retail Trade Liberalization Act paved the way for increased retail competition, along with expansion and growth, innovation, introduction of new technologies, professional management and diversification into new sectors. Trade liberalization has also increased opportunities for International retailers. Retailing in the Philippines spans a gamut of venues including sari-sari stores (mom and pop stores), sidewalk vendors, wet and dry markets (produce and dry goods), groceries, supermarkets, hypermarkets, warehouse and discount clubs, large malls, mall stores and shops, and convenience stores (also known as c-stores)
However, the lifeblood of Philippine retailing is the huge network of small mom and pop stores known as sari-sari stores. Sari-sari variety stores make up 90% of the retail outlets. Sari-sari stores offer lower-income consumers easy accessibility and credit terms, as well as the opportunity to purchase in smaller portions in line with limited budgets. A modern version of the sari-sari store is the convenience store. It mixes the attributes of a traditional sari-sari store, with that of a supermarket, and offers a wider selection of product lines in a friendly, comfortable, and strategically located venue. Typically open 24 hours a day, 7 days a week, it caters to the fast-paced and changing life-styles of urban professionals. There are over 600 convenience stores in the Philippines.
The Philippine retail industry is fragmented, but as large international players enter the country, the industry will likely experience greater consolidation and should be prepared to respond and adapt to incoming paradigm shifts. In fragmented Asian markets like the Philippines, Japan, and Korea, consumers tend to remain loyal to retail stores. In the Philippines, building customer loyalty is a sensible goal for retailers and the ability of a retailer to plan and implement customer retention measures determines future success or failure.
While retail saturation continues to grow in the Philippines, the industry continues to offer market opportunities for new entrants and for current players seeking to expand. Franchising is one of the fastest growing sectors in the economy. The growing demand for new products and services attest that there is plenty of room for new players.
Retailers in the Philippines find their market increasingly competitive, with foreign retailers attempting to move into the market in greater numbers. Competing with global retailers will become increasingly difficult, unless local Filipino retailers can differentiate themselves in ways meaningful to their customers.

Last Updated on: 08-02-2010

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