THE Philippines has been witnessing, and benefiting from, the “wars” or competition in different business fronts. Like tourism and the business-process outsourcing (BPO) industries, different businesses also benefit from, and contribute to, the real-estate boom.
The boom in real estate is creating a lot of positive impact on the business environment. Developments of commercial areas, as I mentioned last week, are spreading in many regions outside Metro Manila, in the process injecting vibrancy in the local economies.
One of the wars in the battlefield of business where “fighting” is raging is in the retail sector. Last year I predicted an explosive growth in the retail business, with international brands coming in to join the competition.
The robust performance of the economy, higher purchasing power of consumers, remittances from overseas Filipinos and the BPO industry, among other factors, are expected to continue, driving the retail business, at least in the next few years.
Local retail giants like SM, Ayala, Robinsons and Starmall continue to expand their market shares by expanding their mall and store networks.
Other companies adopt innovative strategies to cope with the stiff competition.
All Value Holdings, which operates the homegrown All Day 24/7 convenience store brand, recently launched the All Day Mart, a supermarket that also operates round-the-clock. All Value has also launched its own brand in the home-shopping market with AllHome, which serves the needs of homebuyers, developers and interior designers.
All Value’s strategy diverted from the trend in the retail business, whereby local companies bring in foreign brands. Most of the foreign brands are from Japan, namely, 7-Eleven, Mini-Stop, Lawson and FamilyMart. Other foreign brands in the 24/7 store segment are Alfamart of Indonesia and Circle K of Canada.
Foreign brands have also established a strong presence in other retail segments like department stores and supermarkets. These include Forever 21, Uniqlo, Yves Saint Laurent and H&M. These brands appear to be more visible than local brands in high-end hotels and tourist facilities like casinos.
In other areas, like Morato in Quezon City, local restaurant brands dominate the field. Both international and domestic brands of fine-dining restaurants are usually found in the high-end hotels.
Jollibee, of course, remains the leader in the fast-food category. It also owns the local franchise of Burger King from the United States.
McDonald’s is Jollibee’s primary rival in the fast-food restaurant business, but other players are not far behind, like KFC, Kenny Rogers and Tokyo Tokyo.
Even the doughnut market is a battlefield for local and foreign brands. J.CO of Indonesia is the latest newcomer and a successful one, judging from the long lines that form as soon as it opens. Other doughnut brands are Krispy Kreme and Dunkin Donuts, which compete with numerous homegrown brands.
If there’s one retail segment that is directly benefiting from the growing BPO industry, it’s the coffee-shop business.
Today, coffee is no longer limited to boiling ground coffee beans in kettles or pouring hot water in a cup of three-in-one coffee mix. Actually, even the manufacturers (including Kopiko of Indonesia) of three-in-one coffee brands continue to come up with different variations, like cappuccino, low-acid, brown and white, in addition to the regular mix and the sugar-free version.
In the domestic three-in-one market, coffee does not necessarily mean coffee beans. For people who want an alternative to coffee beans, supermarkets and grocery stores sell three-in-one sachets composed of roasted rice, cream and sugar.
Among coffee shops operating in the Philippines, Starbucks leads the pack. The local franchise of the US brand has more than 100 branches in Metro Manila and other urban areas in the country. Its strongest competitor among the local players is Figaro. Other popular coffee- shop brands in the Philippines are Gloria Jean’s, Seattle’s Best, Mocha Blends, Bo’s Coffee, Coffee Bean and Tea Leaf, UCC Café and McCafé of McDonald’s.
Fashion is another battlefield where local brands like Bench, Plains & Prints, Kashieca and Karimadon compete with international brands. Store Specialists Inc. (SSI) of the Rustan’s Group earlier announced it would bring in at least 12 new international brands to take advantage of the robust retail business. Signature brands that have already established a following in the Philippines include Giordano, Levi’s, Nike, Gap, Banana Republic, Guess, Lacoste and Wrangler.
Higher up the income ladder, the entry of luxury automotive brands, in addition to Mercedes, reflects the rising purchasing power of Filipino consumers. The stretch between Ortigas Avenue and Annapolis Street along Edsa is lined up with the showrooms of BMW, Audi, Bentley, Lamborghini and Porsche. Over at Fort Bonifacio Global City, Willie Soong has increased his brands from Jaguar to Ferrari, Range Rover and Maserati.
The real-estate boom and the developments in businesses are creating changes that go beyond economics, profound changes that affect not only the landscape but even its people.
To be continued
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