The future is in franchising

World-famous coach Pat Riley once asked one of the greatest NBA players of all time, George Mikan, why he wore the number 99 on his jersey. Mikan, smiling, replied, "Well, I always felt that whenever I played the game, I never was totally 100 percent. So, I gave myself a wholesale price of 99." Riley laughed and asked, "No retail, huh?" Mikan sheepishly replied, "Yeah, no retail." "Well, tell you what, George," Riley answered, "You sold retail."

For some reason, that exchange between Mikan and Riley struck me because when I watched that special I was a business major who happened to be addicted to anything remotely related to basketball. I liked that whole analogy of basketball and business. Of course, what Mikan was really trying to say was that he wasn’t perfect – and so, he chose to have 99 on his jersey rather than 100 so people won’t expect him to be infallible when it came to basketball. And Riley’s reply was meant to compliment the great center. Mikan gave more than what people expected of him, and that’s why they spent their hard-earned money to watch him play.

To a certain extent, that conversation speaks volumes on what the business of retailing is all about. "Retailing is not simply taking a product from the factory and offering it to the public," says Philippine Retailers Association (PRA) chairman emeritus Samie Lim. "It’s all about providing added value to a product or service."

To elaborate in a more concrete sense, it’s all about providing the space, the environment, the inventory, the distribution points, the convenience, the great payment terms, the packaging, the ambience and all the other factors to entice people to spend their money.

I now have a better appreciation of what Riley’s comment meant. Retail is all about providing that so-called "pull" to the market. That is, convincing people to go out of their way to spend on a product for their personal use. So when you tell somebody you sold retail, the implication is that you are telling that person that he gave his best and that people totally appreciate his efforts.

For this reason, the PRA’s upcoming National Retail Conference and Expo (NRCE) from August 12 to 13 at the EDSA Shangri-La is timely. The theme for this year’s expo is "Excellence."

Personally, I think that the PRA is right on track. We as a country have wallowed too long on this whole puwede na ‘yan mentality. I strongly feel that it is high time that this sick attitude be scrapped from our culture. In this day and age, there’s no room for puwede na ‘yan. Now is the time to excel, to lead.

Samie recalls, "Last year, our theme was ‘Survival.’ We were at the tail end of a presidency and there was so much uncertainty. But this year, we have an administration that basically has a fresh six-year mandate. Thus, everyone is bullish. We feel things are in place for the whole industry to move forward and excel. And that’s why we are putting more stress on excellence this coming conference."

Because of the highly competitive business environment, being excellent is no longer a matter of pride. It’s no longer just icing on the cake. It’s the cake itself. It’s a matter of necessity. And yes, you can say that striving to be excellent is now also a matter of survival.

"Various foreign chambers of commerce are lobbying for the removal of restrictions in retail," says Samie. "We at the PRA see this as a challenge. While we do believe in the need to open up our economy to other countries, it must be regulated. Yes, we do need a dose of foreign investments, and I think this is healthy. But just like medicine, you don’t need to drink the whole bottle if all you need is a shot in the arm. Our government must provide structures to ensure that certain checks are in place to protect the local small- and medium-size enterprises from the attack of the giant hyper-marts of the world. The PRA is lobbying strongly for this."

Samie quickly adds, "However, let’s face it, with the growing trend of globalization, we can’t rely solely on safety nets. We have to be competitive. And the PRA is doing its share to ensure that our players can compete against the rest of the world."

What is the biggest strength of the local retail industry?

"Our smile," Samie replies. "You know, the Filipino’s smile is genuine. You don’t get that same smile when you buy in Hong Kong or in other countries. When you go to retail outlets here, you get a smile that is hard to quantify in money terms. And with that smile, you leave an outlet feeling good about your purchase. There is a personal touch in our retail stores that may never quite be duplicated by foreign retail stores. You have to remember that retail is more than a business in the Philippines. It’s our main social inter-action. And for most of us Pinoys, this is the main reason why we buy. Our other strength is our creativity, artistry, and craftsmanship. China can do all the mass production it wants, but when it comes to originality, creativity and craftsmanship, the Pinoy is world-class. Plus, we’re efficient. Our electronics and food are some of the cheapest in the world. And yet, these industries have survived – and are thriving."

As for the direction the local industry should pursue, Samie says, "The local retail industry is a P1.5 trillion industry. That’s a big, big chunk of total GDP. Thus, it is imperative that we protect it and provide it with all the support. We are not really a manufacturing country like India or Singapore. So we can’t rely on the manufacturing sector to provide the jobs. Retailing provides a lot of the local employment. And retailing provides the easiest way for the middle class to set up businesses. And if you have a middle class that is into small businesses, you will have more consumers to buy products. It’s a whole cycle really. Now, if the government is able to provide the right regulatory structures and the right business environment, the retail industry will be the one industry that will take this country to greater heights. One vital government program that we should really push for is tourism. This will have a great impact on our retail industry. Increased tourism translates to fresh money flowing into the country. With increased tourism comes the growth of many retail businesses – from Philippine souvenir items like jewelry and handicrafts to retail services that offer wellness and health."

What are his thoughts on Philippine retail companies expanding abroad?

He says, "Our retail leaders must work together. The brands that are setting or planning to set up businesses abroad – such as Bench, Penshoppe, Kamiseta, Bayo, Plains and Prints, among others – must work closely together as a group to ensure that a Filipino identity is established abroad in terms of quality and creativity. By working and planning out a common and united expansion strategy, they stand to benefit more – certainly more than if they worked individually."

Samie’s advice to would-be entrepreneurs is to go into the so-called sunrise business or the three Fs – food, fashion and fun.

He adds, "Try to be focused on your product. You cannot be everything to everyone. Find your niche. Also, consider retail franchising. In 10 years, I foresee that 30 percent of all retail businesses will be in the franchise sector."

With people like Samie at the helm of PRA, I think we will finally get rid of that old puwede na ‘yan attitude.

* * *

Thanks for your letters, folks! You may e-mail me at rodnepo@yahoo.com.