(Source: Nikkei | November 25, 2015)
Shares in Metro Retail Stores Group, a major retailer in central Philippines, made their debut on the local stock exchange on Tuesday after the company raised funds in an IPO to fend off bigger players threatening to dominate its turf.
Metro Retail shares opened at 4.3 pesos each, up from its IPO price of 3.99 pesos. After reaching an intra-day high of 4.49 pesos, those shares closed at 4 pesos. The benchmark Philippine Stock Exchange closed largely unchanged, down just 0.05% on the day.
With the Manila market approaching saturation, retail giants like SM Investments, Robinsons Retail Holdings and Puregold Price Club, are looking outside the Philippine capital for growth.
Apart from the main island of Luzon, retailers are also considering central Philippines, also known as the Visayas region, which grew faster last year in terms of nominal gross domestic product. Many outsourcing companies are also expanding there.
With Metro Retail’s 3.6 billion pesos ($76.5 million) fresh capital from its initial public offering, larger players’ expansion in Visayas, whose modern retail trade penetration is lower than the national rate of 28%, may not be as easy as before. “It’s going to be a bit challenging for the bigger ones,” said Alexander Tiu, analyst at AB Capital Securities in Manila. He was referring to SM Retail, Robinsons Retail and Puregold.
The company also believes its established reputation in the region is an upside. “Our 33 years’ presence [in Visayas] gives us the first-mover advantage against other competitors,” Metro Retail chairman and CEO Frank Gaisano told reporters following the listing ceremony at the Philippine Stock Exchange.
Metro Retail, which currently operates 46 hypermarkets, supermarkets and department stores, plans to open around 10 outlets every year, the most of them in Visayas and in the southern Philippine island of Mindanao.
Some new stores will be built as standalone outlets while others will be located inside shopping centers to be built by Ayala Land and Megaworld, a unit of Alliance Global Group. With this strategy, Metro Retail hopes to better compete with SM Retail and Robinsons Retail, which are supported by sister mall developers SM Prime Holdings, and Robinson Land, a unit of JG Summit Holdings, respectively.
Metro Retail claims to be among the top five retailers in the Philippines, with net sales of 28 billion pesos in 2014. SM, the biggest retailer in the country, booked 200 billion pesos in net sales last year. But in Visayas, Metro Retail is the largest department store and hypermarket operator, and the second biggest supermarket company, according to Euromonitor International.
Metro Retail was founded by the Gaisano family in the central Philippine island of Cebu in 1982. But it was only in 2011 that the company undertook an expansion that led to its current store count, according to its IPO prospectus. It was also after that year that the consumption-led Philippine economy began growing by more than 6% annually amid a booming outsourcing industry and a steady influx of remittances.
– By Cliff Venzon