Robinsons to buy small retailers
MANILA - The Gokongwei Family’s Robinsons Retail Holdings Inc. said it would also be active in buying small retail firms as it expects the domestic retail industry to undergo consolidation in the next few years.
Lance Gokongwei, the company’s vice chairman, said this trend was also observed in other Southeast Asian countries.
Gokongwei said the company studied other larger markets in Southeast Asia, such as Thailand and Indonesia, and found that as the economy grows, consumer spending tends to shift to modern trade like grocery stores, rather than the traditional wet markets that have smaller players.
"Modern trade will continue to consolidate at the expense of smaller stores. The Robinsons Group is going to be a leader in the Philippine retail in the next five to 10 years,” Gokongwei said.
He said supermarkets in the country comprised just 25 percent of the business and the rest are in the traditional segment. The figure was relatively low compared with Thailand’s and Indonesia’s of about half of the market.
“I think that it will happen here. You’ll see in general the larger players, like SM Group and Puregold, and we hope Robinsons [Supermarket] will be on that list,” he said.
Consulting firms define smaller players as those with less than five checkout counters.
Robinsons Retail, which at present has a combined network of 940 stores across its various formats, plans to have 1,400 stores by next year.
As of the end of last year, a study of Euromonitor showed that Robinsons was the second-largest operator of grocery-store chains with a market share of about 9 percent. The SM Group leads the pack, cornering about 22 percent of the market.
That changed this year, with Robinsons losing its position after Lucio Co’s Puregold Price Club Inc., which last year only had a 2-percent share of the market, started snapping up smaller players and rapidly increased its store counts in Metro Manila and Luzon, now numbering to about 200 branches.
“Modern supermarkets are generally perceived by consumers to have an advantage over sari-sari stores in aspects including product selection, quality control and shopping environment,” the Euromonitor study said.
Supermarkets account for half of the Robinsons Retail’s revenues last year to P29.45 billion. The department-store business was a far second with 19-percent revenue contribution; the rest was shared by other formats such as hardware, convenience, drug and other specialty stores.
The company is mulling over its initial public offering by the middle of next month, offering up to 484.75 million in new shares that include 22.85 million shares in over-allotment option. It placed an indicative price of P55 to P66 per share, which would result in proceeds of up to P32 billion.
Some 70 percent will be offered to international investors and the rest to domestic investors.
More than half of the proceeds will be spent to expand its supermarket chain, P2 billion for department stores, P1.39 billion for the do-it-yourself shops like hardware, P4.76 billion for convenience stores such as the Ministop chain, P1.9 billion for drugstores and P3.14 billion for specialty stores.