SM wraps up 2016 with most diversified retail operations

MANILA, Philippines - From its origins as a small shoe store, SM’s retail business has become the most diverse in the country today, following the significant merger of its specialty stores under SM Retail in 2016.

The merger has allowed the retail business to fully align with the direction of SM’s other core businesses in banking and property. All three core businesses are able to pursue and increase the momentum of expansion across the country and provide a business mix that will better serve communities where these businesses operate.

In February 2016, SM’s board approved the merger of SM Retail with several leading local specialty retail stores which received final approval from the Securities and Exchange Commission in July 2016.

SM Retail now comprises market leading brands across food retailing, department stores and specialty retailing. Specialty retailing now includes a wide assortment of quality products offered through the stores such as Ace Hardware, SM Appliances, Homeworld, Our Home, Toy Kingdom, Watsons, Kultura, Baby Company, Sports Central, Pet Express and others.

In 2016, SM Retail posted total revenues of P276.5 billion, growing eight percent, while net income grew seven percent to P10.6 billion from P9.9 billion the previous year. The strong results reflected the impact of the merger where the performance of retail affiliates were largely fuelled by discretionary spending on homes, and do-it-yourself activities which track the strong consumption and overall economic growth of the Philippines.

Beyond diversity, the merger also expanded SM Retail’s nationwide footprint to 2,110 outlets at the end of 2016. This comprises 1,556 specialty retail outlets, 57 department stores, 48 SM Supermarkets, 44 SM Hypermarkets and 156 Savemore stores(collectively SM Markets), as well as 39 WalterMart and 210 Alfamart stores.

Amid the increase in nationwide footprint, SM Retail still sees more opportunities for expansion across the country. Store penetration in the Philippines remains one of the lowest in Asia, presenting tremendous opportunities for growth and diversification especially in northern and southern Philippines which have not been reached by organized retail.Through its wide range of retail formats, SM Retail can tailor its expansion program to meet the needs of different communities nationwide. In 2016, about 80 percent of SM Retail’s store expansion was outside of Metro Manila.

SM’s food retail group led by SM Markets added 33 new stores last year, most of which were focused on communities outside of Metro Manila. 

With this expansion, SM Markets maintained its lead amid the strong competition in the food retail industry. It continued to focus on improving the assortment of products on its shelves based on consumer preferences while ensuring that services offered by its stores are complete and innovative.

“The strategy was to tap into high traffic in rural and urban areas by opening new stores as well as systematically and periodically renovating existing stores. This way, SM Markets is able to cater to the evolving lifestyles of Filipino consumers who are also expanding and building communities in and outside of Metro Manila,” Joey Mendoza, president of SM Supermarket, said