PriceSmart sees $200-M from RP operations in two years

PriceSmart expects to earn more than $200 million (P10.6 billion) from its Philippine operations in two years, a top official of the company said the other day.

PriceSmart opened its first warehouse in the Philippines in May 2001 despite a sluggish global economy and initial fears about the country’s peace and order situation.

"The company’s bold initiatives in the Philippine retail sector is our vote of confidence for the economy. Our market research shows that we will make it big here," said Benjamin Woods, PriceSmart senior vice president for Asia operations.

According to Woods, margins have remained a healthy 12 percent despite the economic climate. He added that the company can afford to lower its prices because they source directly from manufacturers and operate on volume.

PSMT Philippines, Inc., which currently operates three warehouses in the country and is set to open a fourth one in Alabang next week, is constructing its fifth store along Roxas Boulevard scheduled for opening next year. A warehouse store in Cebu may be opened in 2004, company officials announced.

The first retailer to open shop in the Philippines after the enactment of the trade liberalization law, PriceSmart invests about $7.5 million to $10 million for each warehouse store it opens.

The company’s warehouse outlets are located at Fort Bonifacio Global City; Congressional Ave., Quezon City and Ortigas Extension, Pasig City. The Alabang store is located at Westgate Center.

From 30,000 Filipino members in 2001, PriceSmart now has over 100,000 members.

"Pricesmart’s Philippine operations are doing very well even during these difficult times," Woods added.

Out of 22 warehouses in 13 locations where PriceSmart operates worldwide, the Fort Bonifacio Global City warehouse ranks No. 5 in terms of sales. The other stores in the Top 5 according to rank are warehouse stores in Costa Rica, Guatemala, El Salvador and the Dominican Republic. In a fortnight, PriceSmart will open its Mexico warehouse, the company’s 14th location.

PriceSmart is a retail enterprise modeled after Price Club, the first membership merchandising chain in the United States. The company’s objective as a retailer is to deliver significant value to its member-customers through an effective and efficient pipeline that leverages economies of scale in aggressive buying, low cost distribution and streamlined operations.