The grocery retail market in the Philippines is forecast to grow on average 9.3% year-on-year between 2016 and 2021. This will make it the fifth-largest grocery retail market in Asia, according to new data we’ve released today.
Speaking today (10 August) at the NRCE, the 24th National Retail Conference in the Philippines, we’ll unveil:
- Grocery retail sales in the Philippines are set to amount to PHP7.08 trillion (US$149.99bn) by 2021 from PHP4.53 trillion (US$95.98bn) in 2016
- This will be driven by a growing population, strong domestic consumption and a buoyant economy
- For the first time ever, the country is expected to move up from sixth place to become the fifth-largest grocery retail market in Asia, after China, India, Japan and Indonesia
Shirley Zhu, programme director for our Asia-Pacific research, says: “The Philippines is an exciting market to watch. Modern trade currently accounts for about 20% of total grocery retail sales and is growing rapidly. We expect to see fast growth in both the number of outlets and sales for modern grocery retailers.”
Filipino retailers are leading the way
Domestic multi-format retailers dominate modern trade and have shown robust growth over the last five years, with SM Retail, Puregold and Robinsons the largest grocery retailers in the country.
SM Retail, for example, is focusing on expanding its mid-sized and small format stores. In 2016, the retailer opened 144 stores, only one of which was a hypermarket, while 111 opened under the Alfamart minimarket fascia, through a joint venture with Indonesia-based PT Sumber Alfaria Trijaya. SM Retail continues to expand beyond Metro Manila; in 2016, 80% of its store openings were outside this area.
Meanwhile, Puregold and Robinsons share a similar ambition to expand further beyond the Luzon area with their multichannel strategies. 7-Eleven, the fastest-growing retailer in the Philippines according to our data, is also expanding its stores into smaller towns across the nation.
Increasing demand for convenience and online shopping
Shirley continues: “Driven by more disposable income and increasingly urbanised lifestyles, Filipino shoppers are demanding more convenience in their grocery shopping. As a result, convenience and online are the hottest channels in the market.
“The number of c-stores in the country is set to increase as domestic retailers continue to drive this part of the market, bringing in more convenience banners to the country. One of the reasons that demand for convenience stores is so high is because of the rising number of business process outsourcing, or call centres, in the Philippines. These are centred mainly in urban areas, operate 24 hours a day and tend to employ young people with disposable income, who want to shop for their groceries as conveniently as possible.
“Meanwhile, online grocery shopping in the Philippines is still in its infancy, but many bricks and mortar retailers have already been experimenting with their own ecommerce solutions. Lazada, the leading ecommerce platform in Southeast Asia, has been operating in the Philippines since 2012 and now has six million users in the country. The ecommerce company reportedly plans to go into grocery in the next two years.”
Looking into the future, Shirley concludes: “There will definitely be fewer ‘mom and pop’ stores – locally known as sari-sari stores – and there is no doubt that the convenience and online channels will be on a fast growth trajectory over the next few years. There is a wealth of opportunity for retailers and suppliers looking to grab a slice of the action in this rapidly evolving market.”
Discover where the opportunities lie in Asia-Pacific
To find out more about our research into the region, and what that means for you, visit igd.com/asiapacific
Download our infographic for a handy guide to the Philippines’ grocery market growth.
- All figures correct at time of going to press
- Note on methodology – this data is derived from IGD datacentre. We conduct research from a wide range of sources, including company reports, analyst briefings, primary engagement with retailers and global news services. We have developed a standardised forecasting methodology that we apply to our research
- IGD grocery retail market size corresponds to the total annual turnover (excluding VAT) of retail outlets predominantly selling food. It includes the sales of non-food articles (i.e. health and beauty, pet care, clothing, DIY etc.) sold by hypermarkets, supermarkets, discounters, neighborhood stores, specialised food stores (bakeries, butchers, etc.) and open markets. It excludes all cash and carry, delivered wholesale, foodservice and drugstores/chemists
Programme Director, International Research