Retailers urged to tap P2.9-T low-income market

MANILA, Philippines - The low-income sector of the Philippines, which makes up more than 90 percent of the country’s population, is  a largely untapped source  of P2.9 trillion in potential income for retailers, a recent survey indicated.    

According to Gary De  Ocampo, managing director of TNS, a London-based market intelligence firm, despite their small earnings, the  low-income market has a collective annual income of P2.9 trillion, making them “a force to contend with, socially and politically.”

According to the Consumer Spending Barometer 2012 survey conducted by TNS, the 90 percent who belong to the D and E class markets are classified as individuals earning minimum wage or below, and those belonging to single-earning families.

De Ocampo urged retail companies to take advantage of this market by creating products that have good quality and offer value for money. “The government can encourage poverty alleviation programs that target this population. For companies, this may mean reworking their business models to come up with high quality products that are affordable. This is difficult but it would be a win-win situation,” De Ocampo said.

As of May 1, 2010, the country’s population has reached 92.33 million based on the 2010 Census of Population and Housing conducted from May to June 2010 by the National Statistics Office (NSO). The 2010 population was higher by 15.83 million compared to the 2000 population of 76.51 million.

During the conduct of the market research by TNS between October 2011 and April 2012, the country’s population is  expected to have risen to around 100 million.

De Ocampo said that with this scenario, the government supplement its poverty-alleviation efforts by encouraging companies to create products that have good quality and offer value for money.

The study, which surveyed 1,500 people from both urban and rural locations nationwide, also showed that Filipinos remain optimistic about their future spending capacity despite having limited savings.

A Filipino family’s typical budget varies greatly per region and economic class, but is usually spent on food, beverages, home utilities, rent and personal goods. Also usually included in the expenditure are non-essential items like beer and cigarettes.   

Results showed that around 40 percent of Filipinos believe their quality of living would improve soon even without sufficient savings, 50 percent  expect their quality of living to remain the same, while only 10 percent believe their economic well-being will become worse.

Compared to their spending activities, Filipinos are poor savers with only 18 percent of individuals surveyed aged 18 to 70 claiming to have savings. These individuals mostly belong to economic classes A, B and C with an average of P42,000 in annual savings.

Those living in the greater Manila area have a greater tendency to save. Only 70 percent of the respondents from this area do not have savings compared to 89 percent in Visayas, and 80 percent in Mindanao.

“The results of the TNS Consumer Spending Barometer 2012 show that the general sentiment of Filipinos toward their quality of life is still upbeat despite having a weak culture for saving. This is because Filipino families spread their income to buy both essential and non-essential items,” De Ocampo said.