Rustan’s in talks to aquire smaller, family-run retail chains

MANILA, Philippines - Rustan’s Supercenters Inc. (RSCI) is eyeing to acquire smaller family-owned retail chains to bolster its presence in the country’s highly competitive supermarket and hypermart industry.

In an interview, RSCI chief executive officer Pierre Olivier Deplanck told The STAR that talks with their smaller counterparts have been progressing well in recent months.

“We met a few families in different areas in the Philippines but there are three of them which are in advanced talks and it’s important to understand each other very well because there is not only a financial part but also an emotional part of letting go a business that maybe the father or mother put up,” he said.

Deplanck declined to identify the retail chains but hinted that the of the family-owned supermarket operators it intends to acquire ranges from less than 10 outlets to having “quite a significant position in a region” of their operations.

He said some of the brands currently operate only in the provinces while some are also in the Greater Manila area.

“There is a whole movement on concentration and consolidation in the retail market in the Philippines. We have seen already a few of our competitors joining with other retailers and we are keen to also join with or buy out businesses of some smaller retailers who would want to compete better against the bigger ones. Because in retail, it’s more of operational scale so it is important to have leverage of scale,” Deplanck said.

The acquisitions, once completed, would beef up RSCI’s business and further intensify competition with retailing giants SM and Puregold.

Deplanck, however, said any of the potential transaction is unlikely to be closed this year as some of the owners are still finding it hard to let go of their respective companies and brands.

“It’s difficult to provide a timeline because there are many members of the family being involved and it takes time to get to know each and every one of them and make them comfortable in letting go,” he said.

Deplanck said RSCI would consider maintaining the name of the retail chain once acquisition is completed given that “the brand is significantly recognized by the market.”

RSCI is the operator of Rustan’s Supermarkets that cater to the affluent, Shopwise hypermarkets that target the middle market, and Wellcome supermarkets of leading pan-Asian retailer Dairy Farm.

It currently operates 46 stores under the Rustan’s Supermarkets, Shopwise and Wellcome brands.

The Tantoco family in 2012 sold a 36-percent stake in RSCI to Dairy Farm of the Hong Kong-based diversified conglomerate Jardine Matheson Group. Luxury retailer Spinnaker Group also sold its 14-percent stake in RSCI to the Jardine Group.