Filipinos spend more in neighborhood stores

MORE Filipinos are turning to smaller proximity stores or sari-sari stores to buy basic goods as one of the ways to manage the impact of inflation on their daily budget.

To manage their cash flow during this inflation-problematic era, Laurice Obana, Shopper Insight director at the Worldpanel Division of Kantar in the Philippines, said most Filipinos opt to shop for basic goods in stores near them to save time due to traffic congestion and resources due to the high cost of fuel, among others.

Kantar is said to be the largest shopper panel in the Philippines which tracks the fast-moving consumer goods purchases of 5,000 local households, representing 27.6 million Filipinos.

Forty-one percent of FMCG purchases in 2022 were made in neighborhood sari-sari stores, putting a bit of pressure on hypermarkets and supermarkets, according to Kantar. This is a six percent increase compared to purchases made in 2020.

Meanwhile, a six percent value share decline in hypermarkets and supermarkets was noted from 34 percent in 2020 to 28 percent in 2022.

“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,” explained Obana in a virtual press conference Monday, Nov. 21, 2022.

“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.”

Obana added that Filipino shoppers are discerning on the choices they make when it comes to their channel and retailer of choice.

Value delivery in forms of rewards, lower prices or promotions is a given. Convenience or the ease of access and availability of options are also important factors that shoppers now consider.

Inflation rose to 7.7 percent year-on-year in October from 6.9 percent in September. The higher inflation was due mainly to the faster price increases of food commodities.

“The latest inflation reading affirms the Bangko Sentral ng Pilipinas’ assessment that inflation is likely to remain above target in the near term amid broadening price pressures and second-round effects,” said the central bank.

Top 10 retailers

Meanwhile, Kantar also launched its first “Most Chosen Retailers in the Philippines” report based on the Consumer Reach Points (CRP) metric. It evaluated both national and regional retailers.

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 purchase within 132 FMCG categories tracked by Kantar.

Cebu-based Prince Hypermart and Gaisano Grand in the Visayas and Mindanao landed in the sixth and eighth spots in the top 10 list, respectively.

National players took six of the 10 spots 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 (seventh) and 7 Eleven (10th) also made it to the list due to their numerous branches spread across the country.

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

Obana explained that retailers can grow by either attracting more buyers to their stores or encouraging existing shoppers to spend more in their store. 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 testament to how a retailer is able to continue to remain relevant to the needs of the shopper.

“The more a retailer is able to 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 are able to understand and address those needs, shoppers will keep coming back,” said Obana.