SM to enter convenience store business with Alfamart

MANILA, Philippines - Mall, banking and retail conglomerate SM Investments Corp. (SMIC) has started its foray into the local convenience store segment, a sector with heating competition given the rapid expansion of top companies and global brands.

The listed holding firm is putting up as much as four new Alfamart stores in the southern part of Metro Manila this year on top of the existing three branches as part of efforts to test the market, a top executive said yesterday.

“Alfamart still on an experimental basis...We have three stores so far: Trece Martires, Dasmariñas and Las Piñas,” SM Supermarkets president Joey Mendoza said in a briefing.

“There are three to four more in the pipeline,” he said.

Last month, SMIC partnered with Indonesian convenience store giant Alfamart to open the first store in Trece Martires in Cavite.

“In those particular areas in the south, you have high population density, high traffic, and a combination of urban and rural portfolio,” Mendoza said, adding that the retail group is building up its confidence in the convenience store business.

Mendoza said the SM Group, which is used to operating big format stores, is learning a lot from its Indonesian partner.

As of end-June, SM Retail has opened eight new stores this year, bringing the total to 249 stores composed of 49 SM Stores, 40 SM Supermarkets, 41 SM Hypermarkets, 97 Savemore and 22 WalterMart branches.

The local Alfamart stores occupy around 150 square meters of floor space, offering basic groceries, fresh chicken, medicines and food-to-go options round-the-clock.

Tim Daniels, investor relations chief of SMIC, said there are roughly 2,500 convenience stores in the entire Philippines, which pales in comparison with Indonesia’s 15,000 outlets.

Established in 1989 by Djoko Susanto and family as a consumer goods trader and distributor, Alfamart entered the retail sector at the turn of the millennium. In 2002, the company acquired 141 Alfa Minimart stores. It is now one of Indonesia’s leading retailers, serving more than 2.5 million customers daily in 7,000 stores.

The local convenience store segment is on a rapid expansion mode due to increasing disposable income of consumers.

Japanese convenience store giant Lawson Inc. will enter the Philippine market through Lucio Co’s Puregold Price Club Inc. FamilyMart Co. Ltd. teamed up with the Ayala and Rustan’s Group while the Gokongwei family is expanding its Ministop store network.

Market leader Philippine Seven Corp., the local licensee of the 7-Eleven convenience store chain, is banking on the robust retail market and franchising to maintain its position as the country’s largest convenience store chain and double its stores to 2,000 in the next three to four years.