Davao sari-sari stores unfazed by 'upscale' 7-Eleven's entry

Subscribe Now January 14, 2016 at 08:22am

Entrepreneur Macmac Lejano, who operates a micro retail shop -- known as a sari-sari store -- is not threatened by the sudden mushrooming of 7-Eleven convenience stores around the city.

His six-year old shop, located along Ilustre Street, is adjacent to one of the newest 7-Eleven outlets along San Pedro Street in the city’s central area.

Despite competition from the global brand, Mr. Lejano said the store, which sells candy per piece and basic kitchen necessities in volumes as small as two spoonfuls, continues to generate a daily income of about P600.

“I still get almost the same earnings every day since I have different customers than those going to the convenience stores,” he said.

Letty Madrasto, who owns a sari-sari store located near a 7-Eleven branch in Ulas -- an area in the southern side of the city, admitted her earnings have gone down on some days, but quickly added that there have also been days when sales were brisk.

Ms. Madrasto said she is confident that customers will continue to buy from her store because she handles every transaction promptly, and people never have to line up to make a purchase as they sometimes have to in convenience stores.

Davao City Investment and Promotion Center Chief Ivan Chin Cortez said the local government expects these neighborhood shops to remain a strong sector under the micro, small and medium enterprises because 7-Eleven is still largely seen by the local market as a rather “upscale” shop.

Nonetheless, Mr. Cortez said 7-Eleven operator Philippine Seven Corp. (PSC) has “discovered a growing demand among the city’s consumers… They are continuously expanding and will reach 70 stores by June this year,” based on its submitted business plan.

Listed firm PSC launched its foray into Mindanao last year with the opening of its first store in Davao City in May.

Department of Trade and Industry-Davao City Director Edwin O. Banquerigo said 7-Eleven’s aggressive roll-out of branches is a rational business strategy in terms of cost-effective operations.

“We can attribute the growth of the 7-Eleven stores in the city to economies of scale,” Mr. Banquerigo said, noting the cost of operating and maintaining a central warehouse for the goods that are distributed to the convenience shops.

Prior to the entry of 7-Eleven stores here, Davao City’s convenience store sector was dominated by homegrown chains, the Davao Central Convenience Store operated by the Felcris group and Choice Mart and HB1 owned by LTS Pinnacle Holdings, Inc.

Both Felcris and LTS Pinnacle also have a chain of supermarkets to complement their convenience stores.

Jojo N. Canda, LTS Pinnacle vice-president for supermarkets, in an earlier interview said they are planning to open at least five convenience stores per year given the changing lifestyle of the city’s residents.

“If we look at the picture of the retail landscape, it is changing… Consumers nowadays are getting busier like the working moms, they do not want to go to the farther and bigger [shopping] malls but instead go to small and nearby stores,” Mr. Canda said.

LTS Pinnacle has seven Choice Mart grocery stores and 51 of the smaller shops with a pharmacy branded as HB1.

On the other hand, Davao Central Convenience Store, the pioneer 24/7 retailer in Davao City, has a network of 82 shops, including those in other parts of the Davao Region.

Mr. Cortez said similar to the comparison with sari-sari stores, 7-Eleven shops are seen as catering to the high-end market while the local convenience stores are for “everyone.”

Source: bworldonline.com

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