The retail sector in the Philippines has seen a sudden rise in big players over the last few decades attracted by the sustained growth in consumption and employment either from overseas or of late, from the information technology-business process outsourcing (IT-BPO) sector.
The proliferation is most apparent in the high density Metros where penetration remains moderate compared with the Philippines’ more developed neighbors in the Asian region.
This is true for some Savemore stores, SM’s mid-size food retail format, particularly, the store at the ground floor of Mezza Residences in Sta. Mesa, which was opened in 2009 in a thriving neighborhood. On any given day, the store and the surrounding restaurants are frequented by the Mezza residents probably out to buy something to cook for dinner, students from the nearby universities who want to hang out, or even passers-by from the neighborhood simply looking to stock the “fridge”.
Just a couple of blocks away, another Savemore store sits on the TV complex of Broadway Centrum on Aurora Boulevard in Quezon City. This store was opened earlier in October of 2009, and like other branches, serves residents nearby as well as commuters that pass the store every day. However, it has recently seen a dramatic surge in foot traffic from the phenomenal following of the popular noontime segment “Kalyeserye” or “Aldub” tandem.
This set-up is mirrored in suburban and even provincial areas where Savemore stores have sprouted in locations not normally accessible to large retailers. Spanning 1,500 to 2,000 square meters, Savemore President Jojo Tagbo says the company’s ability to accelerate the roll out of stores is largely due to its size, making it the fastest growing format in SM’s food retail brand portfolio.
True enough, in less than two decades since it opened its first store in Riverbanks, Marikina in 1998, Savemore has expanded to 130 stores nationwide as of September 30, 2015. From sales of PHP 300 million in 1998, Savemore has also recorded PHP 33 billion in sales in 2014.
Originating from the SM Supermarket concept, Savemore emerged to address a need. Towards the start of the new millennium, shopping habits of Filipinos evolved as Metro Manila also became more congested. People looked for more last-minute essentials or smaller purchases which prompted the concept of a compact neighborhood store similar to the SM Supermarket. The idea back then was to bring SM closer to communities where trusted neighborhood stores or the presence of formal retail don’t exist.
“We wanted to bring SM’s brand of shopping experience nearer to the consumer and nearer to the neighborhoods. We can only do that if we put up standalone stores. This is part of SM’s calling to go to areas where you can serve better,” Savemore President Tagbo said.
Savemore is present in communities and complements the main supermarkets by providing for last-minute shopping needs. This spares the customers the trouble of traveling to the supermarket for smaller purchases, thus saving time, effort and transport costs.
“Our average basket size is about PHP300. But the frequency is very high. It is truly a neighborhood store,” Tagbo said.
In certain municipalities, Savemore has become more than a neighborhood store. It is in fact considered a smaller version of a “mall” as it offers some of the mall’s conveniences such as diversity in the merchandise, and “one-stop shop” services like convenient banking, bills payment, money remittances, and pharmaceutical needs.
“In places like Tuguegarao, Candon in Ilocos Sur, Laoag; mostly in provincial areas, we are considered as the ‘malls’. That is one of our strengths,” Tagbo said.
Savemore has also become the frontrunner for the malls’ expansion such as in SM Megacenter Cabanatuan and Angono, Rizal.
“Savemore is a lot easier to set up than its larger counterparts. In Tacloban, which was badly hit by typhoon Yolanda for example, people immediately needed a place to shop for basic essentials as soon as possible. Due to its size, Savemore was able to open quicker to satisfy the need for convenient shopping,” Tagbo said.
He also said that local government units approach Savemore to open a store in their areas. The presence of a Savemore store in some municipalities often signals progress and attracts more investments for them. In fact, a good number of Savemore stores have been awarded Top Taxpayers by local governments and the majority of its branches are recipients of Gold Bagwis Seals for service excellence from DTI. Aside from these, Savemore also opens job and business opportunities for locals. From about 21,000 Savemore employees, 80% of its workforce is sourced from its host communities.
In the case of Dad’s Pinangat which originally started as a supplier of Savemore Metrohub in 2010, it soon became a regular supplier of both Savemore and SM Supermarket stores in Bicol and select branches in Metro Manila. “Business is doing great, considering that we are now the top maker of this kind of product in the region since we partnered with Savemore. Actually, 70% of our production is supplied to SM. – Ronaldo Moyo Nicerio – owner of Dad’s Pinangat.
Being a neighborhood store, Savemore maintains strong relationships with its host communities by participating in their events like town fiestas, clean-up drives, and Brigada Skwela, among others. Savemore has also helped various institutions to strengthen their socio-civic programs. Among recent deeds are funding the rehabilitation and renovation of San Nicolas Elementary School in Ilocos Norte as well as other public schools near Savemore stores, donating industrial ceiling fans to Laoag City’s Ampitheatre, providing needs of public schools through the Baryanihan coin fund-raising project, and participating in the Department of Education’s Adopt-a-School program.
“We noticed that there are lifestyle changes in the locations where we open. These places become bustling areas and some of the nearby stores enjoy increased business activity,” Tagbo said.
In the recent onslaught of Typhoon Ondoy (Ketsana), Savemore has also provided refuge to affected customers and offered free charging of cellphones. As much as it is able, Savemore also opens its stores during times of calamity, proof of the dedication of its people.
Greater room for growth
Over the last decade, Savemore’s accelerated expansion was achieved despite severe competition from both old and new retail players.
Cora Guidote, SM Senior Vice President for Investor Relations observed that Savemore is well positioned to take advantage of growth opportunities across the country. “There is definitely more room for growth as Savemore is an efficient way to penetrate so many underserved communities especially in provincial areas. Formal retail still constitutes a small portion of total retail in the Philippines,” Guidote said.
Debunking concerns over a saturated Philippine retail market, Guidote added that in other ASEAN countries like Indonesia and Thailand, formal retail means store counts in the thousands.
By the end of 2015, Savemore is targeting to open 30 more stores in key locations most accessible to shoppers.
By 2016, it hopes to reach its 200th store milestone. Savemore also aims to be synonymous to food shopping or the “go-to” store when it comes to basic needs and impulse buying. “We will continue to achieve the desired recall as we continue to reach more communities. We find potential growth outside Metro Manila as we open in previously untapped communities and where populations are building up and becoming more affluent,” he said.
With its “Here to Serve” thrust, Savemore highlights quality and friendly service in areas it reaches. Being the first to open a store that elevates not just local shopping but also uplifts the communities, Savemore is able to create for itself the need for more neighborhood supermarkets that deliver quality products and services.