THERE was a time when high-income Filipino consumers could go only to Rustan’s to buy international brands of perfume, jewelry, clothing and other personal items, as well as kitchen and dining utensils. Later on, duty-free shops provided a limited alternative.
Today, global brands are competing with locally produced consumer items, and luxury items have become affordable to more Filipinos, as the middle class expands.
I mentioned last week A.T. Kearney’s observation about modern retailers making headway in the domestic retail market. The firm, which included the Philippines among the 30 countries in its 2014 Global Retail Development Index (GRDI), named global brands that entered the local market in 2013: clothing seller American Eagle Outfitters, international jeweler Claire’s, Korean bakery Tous Les Jours, Japanese convenience- store chain FamilyMart, and Hong Kong supermarket Wellcome.
In June local media carried the results of a study conducted by property consultant CBRE, which included Manila (actually, Metro Manila) among the most preferred destinations for the expansion of global brands. The study ranked Manila 13th among the top 15 target cities, with 24 new global retail brands coming into the country this year. Manila joined Tokyo, Singapore, Abu Dhabi, Taipei, Dubai, Istanbul, Doha, Beijing, Hong Kong, Toronto, Berlin, Stuttgart, Moscow and Paris in the top 15 list.
In its market view report for the first quarter of 2015, CBRE cited the robust economy and strong purchasing power of local consumers as the main factors that encourage global retail brands to invest in the country.
The firm expects the retail business to stay profitable for the rest of the year as the economy continues to grow, driven by higher consumer spending.
Thus, international food brands Burgoo and Coffee Bean expanded their presence with the opening of new stores at Starmall Prima in Taguig. Gap set up additional stores at Shangri-La Mall and Fairview Terraces. At the UP Town Center, the global brands that have set up shop included Sbarro, Pepper Lunch, Ramen Nagi, Penguin, Sperry, Onitsuka and Stansbury. Melco Crown has brought Porsche Design, Rolex, Stuart Weitzman and Linda Farrow into the casino operator’s City of Dreams Manila.
Rustan’s, of course, still maintains one of the largest, if not the largest, collection of luxury global brands, including Marc Jacobs, Salvatore Ferragamo, Prada, Louis Vuitton, Gucci and Bottega Venetta, among others.
Rustan’s saw the expansion of the local market for luxury goods as early as 1988, when it established Stores Specialists Inc. (SSI) to acquire and develop exclusive franchises for top global brands.
SSI expanded the market for luxury brands by taking them outside department stores. The company opened boutique stores for each brand, which allowed designer brands to present their unique image and reach a wider market.
SSI now has more than 45 international franchises in its portfolio.
Rustan’s Coffee Corp. acquired in 1997 the local license for the Starbucks coffee shop, which paved the way for the development of the coffee shop as a new segment of the retail market. It also provided a boost to coffee farming in the country.
Global property portal Lamudi Philippines says local retailers are also bringing in international fashion brands. It cites entries during the period 2012 to 2014, including Uniqlo, Bershka, Cotton On, Old Navy, American Eagle Outfitters, Aeropostale, and H&M, which opened its 3,000-square-meter flagship store in SM Megamall in November 2014.
According to Lamudi, many global brands are opening outlets outside Metro Manila. Uniqlo, which is targeting 50 stores by the end of 2015, now has 11 branches, including those in Cavite, Lipa and Pampanga. The Japanese clothing brand will establish its presence in the Visayas market with the opening of two stores at the SM City Cebu and SM Seaside City Cebu by the fourth quarter of this year. Cosco Capital Inc. has secured sites for 20 Lawson convenience stores. Lawson is a partnership between Cosco and Japan’s Lawson Asia Pacific Inc. The joint venture is targeting a total of 50 stores this year.
In addition, Cosco expects to open five S&R New York-Style Pizza parlors, also this year.
Cosco’s subsidiary Puregold Price Club Inc. has partnered with Ayala Land Inc. to launch Merkado, a new supermarket brand. The joint venture, Ayagold, plans to open eight to 10 branches in the next three to four years, mostly in Metro Manila. Merkado is targeting the middle-income market, and the first branches will be inside Ayala’s malls.
As shown by the entry of Starbucks, which encouraged the entry of other global coffee-shop brands and the birth of homegrown brands, like Figaro and The Coffee Project, the entry of global brands provide additional fuel to drive the explosion of the retail industry.
To be continued
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