Big retail outlets in the south affect small storeowners profit

CEBU, Philippines - Retail stores are gradually conquering the southern cities and towns, as Cebu City, especially the downtown area, becomes saturated with outlets providing the same products and services to the market.

This trend however has affected the income of sari-sari stores, which are traditionally a community’s source of daily grocery needs.

Robert Go, president of Prince Warehouse Club Inc., said the worsening of the traffic situation in the city is one of the problems that retail companies are trying to help solve at the same time take advantage of.

“It takes people a lot of time and money (unless shoppers are working in the city) to come to the city to shop. We believe that people would like to shop nearby their homes (if given the choice.) People do not want to pay a large sum of money for transportation to buy from faraway places,” he told The Freeman.

Retail companies like Prince Warehouse Club Inc., La Nueva Supermarket, Tita Gwapa and Robinsons Supermarket have established branches in Talisay, Minglanilla and Toledo City, among other towns and cities in the southern part of Cebu.

Last month, La Nueva opened in Minglanilla not just a supermarket but a commercial center with available spaces for other establishments like a massage center, bookstore and beauty parlor, to operate.

La Nueva operations manager Nilo Miranda said the company is not distinctly looking at expanding in the north or the south. La Nueva Supermarket now has four branches—in the downtown area, near Cebu City Hall, Mactan and Minglanilla.

Go said the entry of retail stores Tita Gwapa and La Nueva in Minglanilla has not affected its sales performance, saying Prince is targeting a different market from the others.

“Our kitchenware, department store items are increasing tremendously which offset any added competition and we have different targets and niche. Our loyal shoppers still shop with us,” he said.

Go said the Prince group has eight branches all over the province. It is constantly looking at opening outlets in smaller towns including out of the island. Its target market remains to be the masses or those in the “lower echelon of the pyramid.”

“Our niche lies in our low price and value. We have lower overhead cost and try to continually lower our overhead so we can give lesser selling price to excite the market. Our low cost is the driver. (We try to give consumers complete items to choose from) such as houseware, kitchenware, plasticware, household furnishing, including school supplies,” he said.

The effect of the entry of large retail stores in Minglanilla is different though with the local sari-sari store owners. Hilda, who owns a sari-sari store, said her income has declined since large retail stores entered the municipality.

“Miubos gyud. Kay mas ganahan man sila mopalit didto. Kung sa una, pirme mopalit ug shampoo nga sachet kay nahutdan ug wala pa ka palit, karon dali na man lang kaayong ipalit, (the sales really decreased because they really want to buy there. If before, they buy from us shampoo in sachets because they ran out of shampoo, now it’s very easy to replenish their stocks,)” she said.

Hilda however said those who can’t afford to buy in bulk or large amounts still patronize her sari-sari store.

Prince’s Go said there is a limit to the profit of retailers in the countryside, saying this depends on the propensity to buy, basket size and the income of the consumers. It is a challenge for retailers to earn when consumers looks at them as an oversize sari-sari store.

“When they buy too small a transaction size, (our) overhead might overcome the income of the retailer,” he said.