PH retail industry sales rebounding in 2022 yet

Sales of the Philippine retailing industry are expected to return to its pre-pandemic level in 2022 yet as the long lockdowns in the country badly affected traditional retailers despite acceleration of  e-commerce to an even faster rate in 2020. 

In the “Top 100 Retailers in Asia 2021” by the Euromonitor International, the report noted “Retail sales are projected to return to pre-pandemic levels by 2022, guided by the overall economic recovery.

According to the report, the delayed retail industry recovery is based on forecast where the Philippine economic growth is expected to return to pre-pandemic levels yet by the end of 2021, slower than most of the Philippines’ regional peers. E-commerce will be significant in retail recovery with consumers still wary of going out until the virus is completely contained, or vaccines become widely available. A government recovery plan called “We Recover as One” will focus on providing a conducive environment for e-commerce development as a key cornerstone to recovery, the report stated.

Contributing to the delay in recovery is the Philippines’ COVID-19 lockdown, which was one of the longest globally. 

During the hard lockdown, the report said only essential retailers remained open with shortened operating hours. 

While e-commerce accelerated its growth, the report noted that mixed retailers (except warehouse clubs) were the worst hit category as consumers more easily found what they needed in stock in specialist retailers. 

“E-commerce benefited the most from COVID-19. The category had been growing at a double-digit pace pre-lockdown but accelerated even faster in 2020. Retailers are beginning to see the value of e-commerce, particularly store-based retailers that were forced to halt physical operations,”

An interesting growing trend in 2020 is the proliferation of community stores (or stores situated in nearby communities/neighborhoods), which existed prior to COVID-19. 

According to the report, this trend is particularly driven by Alfamart, a hybrid between a supermarket and a convenience store. The concept increased in relevance in 2020 as consumers looked for the most convenient ways to complete their shopping trips, with the trend expected to continue in the forecast period. 

The Sy Group-owned SM Retail Inc. was ranked number one retailer in 2020 in the Philippines. It also ranked 9th among the top 10 companies with retailing operations in Southeast Asia. 

In the Philippines, SM was followed by Mercury Drug Corp., Puregold Price Club Inc., Robinsons Retail Holdings Inc., Seven & I Holdings Co. Ltd., AS Watson Group, Metro Retail Stores Group, Alibaba Group Holding Ltd., Sea Land, and Wilcon Depot Inc.

In Southeast Asia, the top retailers according to ranking are Tokopedia PT, Seven & I Holdings Co. Ltd., Sea Ltd., Tesco Ltd., Sumber Alfaria Trijaya Tbk PT, Salim Group, Alibaba Group Holding Ltd., Central Group, SM Retail Inc. and Mobile World JSC. 

The report further said that the retailing industry in Southeast Asia registered a decline of 6 percent in 2020. Despite effort from the government to set up a contingency plan in order to tackle the pandemic, second and third waves of infection still occurred in most Southeast Asian countries, resulting in a slowdown for domestic business recovery. 

However, the crisis gave e-commerce players the opportunity to rise at a much faster pace. Tokopedia overtook Seven & I Holdings to rank first in 2020 and Sea Ltd, brand owner of Shopee, also saw its ranking rise by five places to become the third-placed player in the year. 

“This shows how vibrant and dynamic a landscape the Southeast Asia region is,” according to the report.  

Despite challenges with the uncertainty of the political situation in the region that may hinder development and growth opportunities, the report said that Southeast Asia’s retailing value is still projected to grow  6.7 percent compounded growth rate over the next five years  (2021–2025) due to a strong rebound performance post-pandemic.

The report cited he recent coup d’état in Myanmar and continuous political unrest in Thailand have raised concern among international parties and may slow down investment from foreign investors.

“Although the overall region may recover from the pandemic, retailers in the region need to continue to innovate and explore new ideas in order to overcome other types of challenges,” the report added.

Aside from benefiting from the online purchasing trend, e-commerce platform players, such as Tokopedia, Shopee and Lazada, played a big part in onboarding many brick-and-mortar brands onto the online retailing platform. 

With consumers in the region becoming more tech-savvy and many brand players forced to explore the omnichannel, e-commerce and omnichannel are expected to maintain their influence on the overall retailing industry. 

Euromonitor International is a global market research company providing strategic intelligence on industries, companies, economies and consumers around the world. The group provides comprehensive international coverage and insights across consumer goods, business-to-business and service industries.