THE supermarket venture of Ayala Land Inc. and Lucio Co’s Puregold Price Club Inc. will put up eight to 10 branches during the next three to four years, mainly in Metro Manila.
Cesar Cudala, Ayagold Retailers Inc. general manager, said the company will open its first branch of the Merkado supermarket in UP Town Center on Katipunan Avenue in Quezon City by the end of the week, and may be the only branch that they will open for the year.
Next year Cudala said, the company will have two branches, and the rest will be built within two years, or depending on the location of an Ayala Land community development, which may include a site in Marikina City.
Ayagold is the 50-50 joint-venture entity that will run Merkado. Puregold will operate the supermarket, while Ayala Land will handle the property side. Cudala said that branches of the supermarket, which target the middle-income market and mothers age 25 to 40 years old, will be located inside Metro Manila malls for the short term.
There will, however, be efforts to operate standalone branches in the future, especially those located outside the Ayala communities.
“The fact that many of the major players are expanding in the retail sector means they share our opinion that there is still a market. From what I understand, the BPO [business-process outsourcing] segment is growing until 2020, as evidenced by the boom in construction. We believe there is a market to capture,” Cudala said.
Anthony Sy, president of Ayagold and also head of S&R Membership Shopping of Puregold, said there is still room for another player in the supermarket area, as modern retail only captures some 27 percent to 28 percent of the market and the rest still goes to the traditional wet market.
“We look at it as an opportunity. Growing [the business] is quite big. There is room to grow from the broader market,” Sy said.
He said Merkado will not eat up the market of Puregold, which is mostly a standalone grocery store with branches mainly in Luzon.
Each Merkado supermarket will have an average selling area of 2,250 square meters and costs around P200 million to build. It will take three years for each branch to break even, Sy said.
Ayala officials said the establishment of a new grocery-store arm will not affect Ayala Land’s current supermarket partners, most of which are still in their long-term lease agreement.
Puregold also has branches inside Ayala malls in Subic Bay and in Fairview in Quezon City.
Ayala’s own brand of supermarket completes its retail offering without it necessarily being the one in charge of the day-to-day operations.
In the department-store side, it has a partnership with the Tantoco group for the establishment of Wellworth, a brand that will also be put up in new developments. Ayala Land also has a partnership with the Tantocos and Japan’s Itochu Corp. for the establishment of FamilyMart convenience stores.