Retail sector benefits from ‘twin win’ industries’ growth

The continued growth in the local economy fueled by expansions in “twin win” industries of Cebu – tourism and outsourcing – has also boosted growth in the retail sector.

Local retailers all registering growth this year even with the entry of new players from Manila, said Jun Yap, Philippine Retailers Association Cebu chapter president.

“This month (December) alone we barely had time to meet other association members because everyone’s busy with their businesses,” said Yap, who owns and operates gadget shop Junrex Cellphones.

Yap estimated the growth to be at least 15 percent for the industry in 2012.

He attributed the trend to high spending by Cebuanos brought about by job opportunities in business process outsourcing companies and stable remittances of overseas Filipino workers.

domino effect

Based on data from the Cebu Investments and Promotions Center, at least 17 new companies opened in Cebu last year bringing in 11,000 additional jobs mostly for higher end outsourcing services like software development that offers higher pay then call center companies.

“There is what we call the ‘domino effect’. The retail industry’s growth is fueled by growth of these other industries which is a result of the positivity felt by many investors due to the leadership (Aquino administration),” said Yap.

Yap said that continued expansion in the construction industry was fueled by infrastructure developments in both public and private sectors.

New Openings

Cebu saw the entry of several new retailers from Manila such as Seven Eleven, Ministop and Wilcon Builders Depot , as well well as expansion in Cebuano-owned brands.

In August this year, Philippines Seven Corp. president and chief executive officerJose Victor P. Paterno said they would open 30 stores in Cebu in 2012 and 100 stores by 2014 with an investment of at least P5 million per store.

Retail convenience shop chain Ministop opened two outlets in Cebu last October.

According to Ministop Phils. general manager Rowena Sarte, they plan to open 60 branches in Cebu by 2017 starting with 15 stores to open this year.

Major construction retail chain Wilcon Builders Depot opened in Cebu in November 2012, encouraged by the entry of many Manila-based real estate developers with projects in Cebu.

population base

“The solid population base of at least three million Cebuanos is large to sustain and grow our business here. We all know that outside of Manila, Cebu is the fastest growing economy fueled by industries such as tourism, outsourcing and the OFW remittances,” said Wilcon Builders executive vice president and chief operations officer Rosemarie B. Ong.

On the local end, fashion retail chain What A Girl Wants opened five new shops and renovated its Ayala Center Cebu store last year, featuring local fashion ambassadors.

WAGW opened three outlets in Metro Manila, one in Cagayan de Oro and one in SM Consolacion ending 2012 with a total of ten outlets in key cities in all regions of the country.

Local retail chain Fooda Saversmart recently opened its fifth store in Cebu in barangay Kasambagan, Cebu City and plans to open at least one shop every year starting this year.

Prospects for 2013

According to Yap, he expects a busier 2013 for the industry with it being an election year.

Similar to 2012, this year will see more robust growth in the industry influenced by gains in tourism, construction, outsourcing and remittances.

Yap said he sees a trend towards more use of on line shopping among retail chains and buyers influenced by “technology-hungry” consumers.

“A lot of the gadgets we sold in our shops are smartphones and tablets. People are becoming more active in the cyberworld not only in social media but also in terms of online transactions like bill payment. Retailers should be able to adopt to this trend in order to stay competitive,” said Yap.

Consumer spending for gadgets has rebounded from last year, he said, with consumers more confident about spending for the latest models which reflects a lifestyle attuned to an online environment.

Challenges

While all these gadget are available, the challenge now is how to create that enabling environment like setting up secure systems with banks for online payment transactions according to Yap.

“We (retailers) should be talking soon to the banks about how we can improve the system especially for local players so that we can ride the technology wave,” said Yap.

He said the Philippines, including Cebu, is still a “virgin market” in terms of online retail while e-commerce is mainstream foreign companies .

“Retailers should overcome their fears about integrating technology in their business. Failure to adapt to the changes would be detrimental to their growth,” Yap said.