Wal-Mart of US defers entry into RP retail market

Discouraged by the general impression of political instability and economic uncertainty, retail giants planning to locate in the Philippines have decided to put their plans on hold until the situation normalizes.

Investment officials at the Department of Trade and Industry (DTI) told reporters that US retail giant Wal-Mart International has put on hold its plans, carefully observing economic trends and the political climate that have direct impact on the consumer market.

According to a top DTI official, the retailers were particularly sensitive to the latest developments since the slightest economic downturn and political uncertainty directly affect consumer spending.

The official said Wal-Mart is having second thoughts about picking the Philippines as the location for what would have been its first and only venture in the entire Southeast Asian region.

Earlier, Wal-Mart was enthusiastic enough to come in even without a local partner, confident that the Philippine market was lucrative and had good prospects well into the next decade.

Wal-Mart even sent a team to the Philippines who met with DTI officials to discuss its plans to open a retailing chain in the country, encouraged by the opening of the market to foreign retail companies.

Wal-Mart already buys $680-million worth of Philippine products that it sells through its retail chains around the world. Setting up operations in the Philippines would boost this procurement level, especially when the Wal-Mart group expands into the rest of Asia.

The DTI said Wal-Mart was not interested in the Philippine retail market alone but also had plans of expanding its Philippine operations as a "depot" for its subsequent operations in other Asian countries.

Wal-Mart Stores Inc. is the world’s largest retailer of general merchandise goods and also operates Sam’s Super Centers which features a wide variety of hard goods, soft goods and grocery goods.

The group operates 1,869 discount stores and 564 supercenters and 451 Sam’s clubs.

Wal-Mart earlier took over 74 units from the Interspar hypermarket chain in Germany, acquired from Spar Handes AG, a German company that owned multiple retail formats and wholesale operations throughout Germany.

Wal-Mart’s first successful venture into Asia was in Korea when it acquired interest in four existing units as well as six undeveloped sites previously operated by Korean Makro.

Wal-Mart has been interested in the Philippines since last year but its entry was delayed until the new retail trade liberalization law was passed.

Wal-Mart had original planned to establish operations in Indonesia but the group ultimately decided to pull out. The Philippines has since become the top candidate for its regional headquarters or backroom operations in the meantime.

At least four foreign retail trade chains were expected to come right after the passage of the new Retail Trade Law, including Wal-Mart. The other three were Seiyu of Japan, the Hong Kong-based Wellcome and Ahold, a retail trade chain based with businesses in Malaysia and Thailand.