(Source: Malaya Business Insight | 12 August 2016)
Filipinos consumers are the most optimistic in the world and are increasing their savings for future spending, providing an opportunity for retailers.
Trade Secretary Ramon Lopez, in his speech at the National Retailers Conference at the SMX Convention Center, also urged retailers to explore other trends like luxury retail as well as other markets like ASEAN whose population’s taste continues to diversify.
As it is, retail trade is benefitting much from the country’s consumer-driven economy, noted Lopez.
He said in the first quarter of 2016 alone, the Philippines registered P225.4 billion in retail trade output, which has an average growth rate of 6.1 percent and has maintained an average share of 13.3 percent to gross domestic product(GDP) from 2010 to 2015.
Citing the Nielsen Global Survey of Consumer Confidence and Spending Intentions, Lopez said the Philippines’ consumer confidence for the second quarter of 2016 has reached 132 – the biggest quarter-on-quarter surge of a country for this year.
“Our country also has the highest consumer confidence among 63 surveyed countries, leading India (128), Indonesia
(119), the United States (113) and Denmark (112),” he said.
Lopez also noted that Filipino consumers are increasingly saving, with 65 percent keeping their spare cash and spending it in the future for holidays and vacations (33 percent), home improvements and decorations (32 percent), new clothes (30 percent) and new
technology (29 percent).
He said in the first quarter of this year, consumer expenditure grew by 7.01 percent, which comprises 69.81 percent of the total expenditures of the country and translates to about P1.3 billion of GDP.
“This figure evidently reflects how consumers drive our economy to become robust and progressive,” he added.
Lopez said retailers need to tap the immense opportunities provided by the ASEAN market, citing a DBS Research Group report which said the ASEAN middle class – a segment with diversifying tastes, growing awareness on food, personal and technology security, and
largely composed of millennials – is expected to double to up to 500 million in 2020.
“With a compounded annual growth rate of 4 to 28 percent and a penetration rate of less than 50 percent, there is still much room for growth of modern retailing in the ASEAN region,” he added.
Lopez said retailers should diversify and innovate their business models based on growing trends on luxury retail, which is driven by international tourism, e-commerce, inclusion of retail stores in real estate development and the value-based consumption preferences of millennials.
– By Irma Isip