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MANILA - Competition is giving SM a run for its money in Metro Manila, but the country's biggest retailer is far from bowing down.
The SM food retail group reported a "pretty healthy" 4 to 5 percent growth in same-store sales in provincial stores in the second quarter, but same-store sales in Metro Manila was flat, largely due to "the number of competitors."
"Basically, it's expected in a way because there are so many choices of supermarkets around the neighborhood. There are still some growth in some locations, but it doesn't mean the total is not growing," Robert Kwee, SM Retail executive vice president, said in an interview.
He said the group's supermarket in SM Manila is surrounded by 29 small, medium and big rivals.
"This means the market in Metro Manila is not nearing saturation, but there is a lot of competition," said SM Supermarket and Save More president Joey Mendoza.
"The competitive situation is getting more and more exciting. In the provincial areas, we're growing very well," Mendoza said.
Merchandise sales of the retail group - comprised of the non-food and food group - grew 8.3 percent to hit P73.8 billion in the first half, of which the food group's share slipped to 56.6 percent this year from 57.4 percent in 2011.
Kwee said the SM Retail food group continues to see opportunities to expand all of its store formats nationwide.
Bulk of its retail expansion plan for the rest of 2012 will be for its SaveMore stores, the stand-alone store format which is patterned after a typical neighborhood grocery store. The group will open nine SaveMore branches, three hypermarkets and three supermarkets before the end of the year.
At end-June, SM's food retail subsidiaries had 140 stores inclusive of 34 supermarkets, 73 SaveMore stores and 33 hypermarkets.
"We'll stick to our market. We just have to work very hard. We cannot be complacent and we just have to work harder and better," said Kwee.
Astro del Castillo, managing director of First Grade Finance Inc., said SM has been lording over the retail industry and "it will take another giant to be a threat to another giant."
"We can now see there are a lot of competitors. Admittedly, it's been having an impact on SM, but they are still miles away from their competitors. It's a big market and SM's advantage is it has been leading ever since. They outgrew almost everyone," said del Castillo.
That second giant may very well be Puregold Price Club Inc., the country's second biggest grocery operator, which had 109 stores in operation including 66 hypermarkets, 32 supermarkets and 11 discounters at the end of the first semester.
Aside from growing its own network of Puregold stores, the Lucio Co-led retailer recently completed the acquisition of upscale S&R Membership and Parco supermarkets, allowing the company to address all consumer segments of the market.
Aida de Guzoman, Puregold vice president, said the market is big enough to accommodate new players in the retail industry.
The intense competition will be healthy for the consumers, as retailers fight to give the best value for money and quality services and products to customers, del Castillo said.
"Definitely, we have an improving economy. The purchasing power of Filipinos is getting better. OFW remittances and the business process outsourcing industry is growing. Other sectors like property have sustained its growth," he said.
"Even with the crisis, the fund managers are too liquid that they can support the fund raising initiatives of these big retail companies for expansion," the analyst added.
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