Retail challenge: Keep up with foreign brands

With the creation of an Asean economic community, more foreign retailers and brands are expected to penetrate the local market.

Robert Go, president of the Philippine Retailers Association Cebu, said the challenge for local retailers starting next year is how to hold their own against these foreign retailers.

“The challenge is to keep up with the foreign brands. We have to improve ourselves to cope with challenges. You will see foreign retailers coming in the next years,” Go told reporters.

Retailers are encouraged to set up branches in remote areas like what Gaisano Grand is doing. Gaisano Grand recently opened a mall in Liloan town in northern Cebu. (CONTRIBUTED PHOTO)

The entry of more brands will be good for the consumers though, since this will likely bring down prices and provide a wider range of choices, he said.

“Retailers will have to sacrifice their margins to sustain their market shares,” Go said.

But market saturation is a risk, especially for fast-moving consumer goods, he added. To avoid this, Go said PRA Cebu is encouraging its members to explore remote areas in the countrysides that are not served yet by the big retailers.

He said Prince Warehouse, which he owns, has adopted this strategy and is expanding operations in areas outside Metro Cebu.

“PRA encourages its members to move towards the provinces or other remote areas, where there are less retailers. They should also become more competitive in the market by innovating and coming up with products that can compete with the foreign brands,” he said.

The group, however, remains confident about growth next year.

Go said the retail sector is still likely to grow by 8 to 10 percent next year, which is an election year. Spending normally goes up in an election year.

Meanwhile, Go said they have noticed an increasing preference for high-value and luxury merchandise.

“People tend to buy more expensive items. People tend to spend more on new clothing, new furniture, household items, etcetera. Most people don’t spend more on food because they have enough but instead spend more on luxury items,” Go said.