Strategic Objectives and Challenges of SM Retail in the Philippines
According to Euromonitor latest company data, SM Retail continued to be the largest multi-format retailer in the country in 2017. The company operates under SM Investment Corporation, a publicly-listed holding company with major ventures in banking, property and retail. SM Investment Corp owns 77% value stake of SM Retail, which comprises of different store formats, including mixed retailers, supermarkets, hypermarkets, convenience stores and speciality stores. The consolidation of its retail units in 2016 bolstered SM Retail’s competitive position and growth potential, as well as added greater diversity.
Continue retail expansions beyond Metro Manila
Rapid urbanisation in the Philippines represents high growth potential in modern retailing. SM Retail is leveraging its diverse market-leading brands across grocery retail, department stores and specialty retailing, and has been expanding all retail formats into smaller cities and rural provinces. Back by SM Prime Holdings, SM Retail gain competitive advantage in flexible retail formats and diverse product offerings. 80 per cent of new openings in 2016 was outside Metro Manila.
Maintain diversified retail portfolio
The significant merger of more than a thousand specialty stores that comprised across a portfolio of apparel, food, DIY, home and garden stores under SM Retail led the company to become the most diversified retail giant. The merger strengthened SM malls competitiveness and synergies with strong growth potential. Nonetheless, leading discretionary brands face growing competition of entry of international brands and rise of online marketplaces, presenting increased challenges to maintain sales revenue.
Capture more market share in convenience stores
Convenience store is growing crowded and intense in the Philippines. The channel had long been dominated by international chain 7-Eleven, which exceeded 2,000 stores in 2017. Ministop and Family Mart are next rival chains. SM Retail’s joint venture with Alframart of Indonesia emerged as strong competitor since its foray in 2014. The company is focusing nationwide expansion to capture increase market shares. Alframart prides its strengths in competitive prices, large store spaces and wide product selections.
Gear to battle the logistic challenge in e-commerce
Being the biggest archipelago, Philippines presents dynamic landscapes in retail network due to insufficient of infrastructure and accessibility. SM Store partnered with Lazada to meet the growing demand of online shopping. SM Supermarket is working to extend operations on e-commerce through click-and-collect, leveraging its established presence of physical retail. SM Retail is also exploring options to create own e-commerce platform, and continuing upgrades of existing websites and mobile applications.