(Source: Business World | November 1, 2015)
Japanese retailers are looking for growth in other markets like the Philippines, which have strong economic growth and young demographics, as the East Asian country suffers from a slowdown in consumer spending and a rapidly aging population.
Fast Retailing Co. Ltd., Family Mart Co., Ltd. and Aeon Co. Ltd. are keen on expanding their businesses in the Philippines, while Isetan Mitsukoshi Holdings, Ltd. is considering setting up shop here, their company officials said last week.
Fast Retailing Philippines, Inc. Chief Operating Officer Katsumi Kubota said the owner of the Uniqlo clothing brand plans to boost its network to 120 stores in the Philippines — up from the current 25 — and beat homegrown brand Bench in terms of “affinity to the people” by 2020, or eight years since commencing its operations.
Last week, Uniqlo opened a store in Cebu — its first store outside Luzon — and if that should turn out to be a successful venture, store openings in key urban centers in the provinces such as Davao, Cagayan, Iloilo and Bacolod may follow suit, Mr. Kubota said.
“It’s going well. If that works well, I can go to any other island and there are 7,107 islands. But for sure, I am building my structure so that I can go to other islands,” he said.
Once Uniqlo gains nationwide acceptance, Fast Retailing can bring its other brands here such as GU, which offers more youthful and fashionable clothing, and Theory, an upscale contemporary clothing line.
“We still have a long way to go so that the Filipino people would understand what Uniqlo is truly,” Mr. Kubota said.
Growth in the Philippines will be driven by its young and growing population, in contrast to Japan where its population is “old and decreasing.”
“I really have to touch the middle class. I cannot only focus on the upper class. I want to cater from A, B, C all the way up to the middle-class people. That’s what we want to do here because this is the mass of this market,” he said.
EXPANDING MARKET REACH
Like Fast Retailing, Family Mart Japan plans to expand its market reach after starting its business in 2013 in the Makati financial district, company President Isamu Nakayama said.
“We just started strong in the Makati area where consumers belong to the higher class but we want to expand our business to the whole Philippines. This is our challenge,” Mr. Nakayama.
In July, FamilyMart started its provincial expansion with the opening of new stores in Cebu. It has 113 stores and the plan is to hit 500 stores by 2018.
“If we have enough confidence, we will expand our stores outside Metro Manila,” Mr. Nakayama, noting that the robust economy is the “most important factor” that will drive its expansion.
FamilyMart Japan has partnered with Ayala Land, Inc. and SSI Group, Inc. for its venture here.
Aeon, which is Robinsons Retail Holdings, Inc.’s partner for the Ministop convenience store business in the Philippines, remains upbeat despite the influx of Japanese firms like FamilyMart and Lawson.
“Ministop expanded here earlier than other convenience stores. We have a very powerful partner. Robinsons has many call center buildings where we can expand… We have several good points,” Aeon Chairman Hiroshi Yokoo said.
Aeon is beefing up its business in the Philippines because of the strong consumer spending, a reversal of what’s happening in Japan.
“In 2017, new consumer tax will increase, bringing the total to 10%.
Japanese consumers don’t like the new tax. They keep their money and they don’t spend anymore,” Mr. Yokoo said.
Isetan Mitsukoshi, Japan’s largest department store operator, is drawn to the country’s young consumers aged 20-30 years old and wants to study the market more before venturing here, company President and Chief Executive Officer Hiroshi Ohnishi said.
“Originally, we want to bring the department stores, but now we want to have some kind of a specialty store. I just have seen some of the shopping centers and we have to make a new specialty concept to make value for Filipinos,” Mr. Ohnishi said. — Krista Angela M. Montealegre