Retailers: 2020 a catastrophic year

Johanna O. Bajenting
·5 min read

FOR the retail industry, 2020 was a nightmare. It upended everything.

Burdened by low consumer spending and disrupted supply chains due to limitations in logistics, the retail industry has been bleeding cash due to the coronavirus pandemic.

“Restaurant members totally closed and in-house dining remains a challenge. Fashion clothing and general merchandise are still struggling since sales, especially in malls, are very minimal. Only essentials such as supermarkets, pharmacies and hardwares were allowed to open early during the enhanced community quarantine,” Robert Go, spokesperson of the Philippine Retailers Association Cebu Chapter, said.

“Even now that mostly all are allowed to open except entertainment, these retailers on fashion, personal goods, travel goods and household items among others are still experiencing very low sales,” he added.

Go said as the economy continues to decline due to the disruptions of the coronavirus pandemic, people generally have no money and no confidence to spend.

“Even when Christmas was here, compared to last year, there were still very few people who spent. People started to buy only a few days before Christmas,” he said.

Go said 2020 was a catastrophic year for retailers.

Malls took time to reopen and during the loosening of the quarantine status, stores experienced little to no customer traffic due to social distancing measures and people spending less due to the global health crisis.

No profit

According to Go, no one talked about profit for 2020 but about how much losses each player recorded. He said losses could range from 10 percent up to 80 percent. Even businesses of deep pocketed retail players weren’t spared.

Lucky for those who immediately shifted to various online platforms and they somehow managed to stay in business in the middle of the pandemic. But for those who haven’t invested in online tools yet, they are bleeding until now. Some even decided to close their stores.

Go said retailers turned to technology to help them stay afloat in business. This paved the way for delivery platforms like Lalamove, Grab, Maxim and most recently, Aguila to dominate the streets delivering food, documents, groceries, medicines, among others, door-to-door.

“Retailers turned to third party deliveries or self-delivery through trucks and motorcycles,” he said.

Online payments also rose as homebound shoppers chose to purchase items online, avoiding the risks of coronavirus transmission if they physically shop.

Cautious, selective

Days before Christmas, Kantar, the world’s leading data, insights and consulting group, revealed that Filipino shoppers remain very cautious with their fast moving consumer goods (FMCG) even as the Philippine economy begins to show signs of stabilization.

Marie-Anne Lezoraine, general manager of the Worldpanel Division at Kantar Philippines, said while Filipinos want to save, they are still looking at ways to celebrate the Christmas season albeit differently this year due to the pandemic.

“Based on the data we’ve gathered over the years, we’ve seen that FMCGs traditionally experience 20 percent uplift every Christmas season,” Lezoraine said in a statement. “Also, on the average from 2017 to 2019, we’ve noted that more than half (57 percent) of Filipino households receive FMCG items as Christmas gifts. This year, however, will be different due to the pandemic, as Filipinos become more selective and take into consideration both social and economic factors when purchasing goods.”

Under normal circumstances, Lezoraine said that all-purpose cream, canned fruits and vegetables, pasta, mayonnaise and cheese were the top five products that usually benefit from uplift during the holiday season. Interestingly, most of these food products have gained popularity as more people cook at home since quarantine measures were implemented in March. In the non-food category, the items which are most popular within gifting were liquid soap, colognes, lotion and cosmetics.

Adjusted shopping habits

Since the lockdown to curb Covid-19 infections, Filipino shoppers have adjusted their shopping baskets to prioritize food over beverages, home care and personal care, a trend observed across all socio-economic classes.

According to Kantar Philippines, households belonging to the upper ABC class increased their food purchases by 11 percent this year versus the same period in 2019. In contrast, the lower C to E sectors, save for food have been spending significantly less across all categories.

Data from Kantar Philippines also showed that from January to September 2019 (year-to-date (YTD) versus January to September 2020, Filipinos were shopping less frequently but focusing their money on more valuable items. In addition, they visited one-stop-shop channels like hypermarkets and supermarkets to make the most out of their shopping trips.

Supermarkets, according to Lezoraine, registered an almost 28 percent value share in YTD September 2020, while grocery stores (6.7 percent) and hypermarkets (5.9 percent) also gained traction as a result of the quarantine measures and their one-stop-shop offering. It is important to note, however, that sari-sari stores remain an important part of the Philippine economy’s road to recovery as everyone shops in this channel.

Lezoraine said, “Despite the slight decline in spend share from 39 percent in YTD September 2019 to 38.1 percent in YTD September 2020, Filipino shoppers frequented sari-sari stores four times a week proving that these small stores still attract a wide range of consumers and continue to be the top retail channel to reach the D and E sectors.”

Kantar Philippines also noted that the Covid-19 pandemic continues to impact the FMCG choices of Filipinos. Lezoraine said, “Businesses must ensure that they adapt to the evolving shifts in consumer behavior and the challenges that we all face.” (with KOC)