Sari-sari stores benefit from inflationary times

CEBU, Philippines —  Sari-sari stores and small neighborhood retail channels continue to be profitable businesses in the post-pandemic era, as Filipino consumers become more discerning in their basic commodity spending adapting to inflationary times.

According to the latest market study conducted by shopper panel Kantar, the inflation pressures led to more Filipinos buying their household needs in neighborhood stores like sari-sari stores, to save on gas, transportation fares, and time.

“What we have seen is that, in general for packaged goods, shoppers are coping with rising prices by being more open to value brands. To some extent, however, they also take into consideration where to shop. Nowadays, with multiple retailers and channel options within reach, shoppers can easily adapt to what would best fit their budgets and lifestyle that will address their needs at the moment,” said Laurice Obana, Shopper Insight director at the Worldpanel Division of Kantar in the Philippines, during the study’s presentation to the media held virtually.

According to Obana, 41 percent of FMCG (fast-moving consumer goods) purchases in 2022 were made in neighborhood sari-sari stores, this is a six percent increase compared to purchases made in 2020. This development has put pressure on bigger supermarket outlets, and hypermarts with a six percent value share decline in hypermarkets and supermarkets from 34 percent in 2020 to 28 percent this year.

“Filipinos put a premium on value. While value can be as straightforward as cheaper goods or paying less for the same quantity, other factors such as the increase in gas prices, traffic, and uncomfortable modes of transportation have redefined value in more encompassing terms when it comes to shopping,” Obana noted adding that Filipino shoppers are discerning on the choices they make when it comes to their channel and retailer of choice.

In this particular study, Kantar tracked the FMCG purchases of 5,000 local households, representing 27.6 million Filipinos.

In 2022, Kantar launched the 1st Most Chosen Retailers in the Philippines report. For this ranking, Kantar evaluates both national and regional retailers based on the Consumer Reach Points (CRP) method.

CRP calculates the number of shoppers and the number of times they have made a purchase in a particular retailer within 12 months. This measure accounts for in-home, direct-to-consumer purchases within 132 FMCG categories tracked by Kantar.

National players took six of the 10 spots in Kantar’s ranking of the top retailers in the Philippines as of September 2022. Puregold emerged as the most chosen retailer among Filipino shoppers nationwide, followed by SM Supermarket, Mercury Drug, and Robinsons Supermarket. Convenience stores Alfamart (7th) and 7-Eleven (10th) also made it to the list thanks to their presence in numerous locations in the country.

Kantar, however, noted that retailers which are more regionally based have placed significantly in the national ranking. These are CSI Supermarket in Northern Luzon (5th), Cebu-based Prince Hypermart (6th), Cebuano-owned Gaisano Grand in the Visayas and Mindanao (8th), and LCC Supermarket in Southern Luzon (9th).

Obana explained that these regional players remain a formidable force in their bailiwicks. While Puregold and SM Supermarket also topped the list of retailers in Luzon, CSI Supermarket closed in at 3rd place while LCC Supermarket ranked 5th.

In the Visayas, Prince Hypermart edged Puregold for the top spot. Lastly, Gaisano Grand placed first over Mercury Drug as Mindanao’s retailer of choice.

These retailers can grow by either attracting more buyers to their stores or encouraging existing shoppers to spend more in their stores, Obana said.

With the number of retail options available to the consumer, CRP highlights how being the retailer of choice every single time a shopper decides to buy is a testament to how a retailer can continue to remain relevant to the needs of the shopper.

“The more a retailer can check most if not all the boxes that Filipino shoppers consider when purchasing their FMCG needs, the more retailers become the shopper’s choice. When retailers can understand and address those needs, shoppers will keep coming back,” she added.

Kantar is the world’s leading marketing data and analytics company with a strong presence in over 90 markets including the Philippines.