(Source: Sun Star Cebu | 22 August 2016)
SM Investment Corp. (SMIC) is beefing up its investments in retail, buoyed by the country’s strong economic momentum and expanding middle class.
The company also expressed interest to cement its presence in the Visayas-Mindanao area by following a multi-format growth strategy for SM Markets to address the lack of organized retail in many parts of the country.
SM Markets is SM’s food retail arm that consists of the SM Supermarket, SM Hypermarket, and Savemore brands.
Specifically, SM is aggressively opening more Savemore stores across the country and will soon roll out Indonesia’s mini-mart store concept, Alfamart, which is presently concentrated in Luzon, said SM senior vice president for investor relations Corazon Guidote, in a press conference yesterday.
“Visayas-Mindanao is a new growth region for SM where significant opportunities await investors. Its underserved markets are hungry for the kind of aspirational products and services that SM tends to bring into its development,” said Guidote.
The growing population, the expansion of the middle class, high-spending power, and the overall positive market sentiment have been the constant factors that push SM to continue growing its businesses.
She reiterated that the company’s development of SM Seaside in Cebu’s South Road Properties, one of SM’s recent capital intensive projects, signals their “serious take on Cebu being a business destination.”
Guidote and other top officials of SM Investment Corp. were in Cebu for the SMart Investing Summit 2016 in partnership with Col Financial Inc. The company hopes to attract more Cebuanos to invest in SM’s growing business units and participate in the country’s stock market.
While the firm is set to open malls in cities where they aren’t present, Guidote said the company will also pursue regional expansions for its Savemore and Alfamart concepts.
This move, according to Guidote, will help them fill the gap in the country’s retail coverage, which at present, is one of the lowest in Asia.
“On the number of stores per 100 population, Philippines is one of the lowest in Asia,” said Guidote.
According to Tim Daniels, SMIC investor relations chief, they are speeding up the expansion of SM’s retail business because of the expanding middle class.
“When we put up a store regardless of what size it is, what format it is, they become full quite quickly…this tells you that people really want to go shopping. The challenge should not be how to expand but on how to expand quickly to meet all the needs (of the customers),” said Daniels, adding that this is why the company ventured into different retail formats.
Savemore opens an average of 30 to 40 stores per year. Alfamart, on the other hand, now has about 160 stores, mostly concentrated in the Luzon area.
“We don’t have expansion programs yet for Alfamart in the regional areas outside Luzon but definitely we will bring it across the country very soon,” said Guidote.
Alfamart operates like a mini supermarket. Unlike convenience stores, this retail concept sells merchandise at a supermarket price and sells ready to eat and cooked items. Guidote emphasized that this concept is not meant to heavily compete with wet and dry markets or sari-sari stores but instead complement them.
In Visayas and Mindanao, SM Markets has a total of 42 stores.
SM has earmarked between P70 and P80 billion every year to facilitate its expansion programs.
Since listing in the stock market in 2005, SM’s market capitalization grew by 19.8 percent per annum to P837.2 billion as of Aug. 18, from P127.2 billion in 2005.
– By Katlene O. Cacho