Retailers upbeat over rising OFW remittances

Consumers want value-for-money, experts say

MANILA, Philippines –The country’s retail industry will improve in the coming months, largely due to steady remittances from overseas Filipino workers, according to industry experts.

“The worst is over. The industry was hit hardest during the past 12 to 18 months but things are starting to look up for the next 12 months,” said Frederick Go, overall chairman of the 18th National Retail Conference, in an interview.

Go attributed the steady recovery of the retail industry to three factors: OFW remittances, tourism, and the business process outsourcing (BPO) industry.

Dr. Cayetano Paderanga of the University of the Philippines School of Economics said that among the three, the retail industry should focus its attention on OFW remittances.

“If it continues to grow, then perhaps consumers will end up buying more and maybe the larger purchases will start to become strong again,” Paderanga said in an interview after the conference opening ceremonies at the SMX Convention Center in Pasay City.

The two-day event will discuss the latest trends and prospects in the country’s retail industry.

Carrying the theme “Opportunities in Crisis,” the conference seeks to look at the overall condition of the retail industry, amid local and international problems including the global financial crisis and the A(H1N1) scare.

Paderanga noted that gross domestic product or GDP dropped from 6.9 percent in the first quarter of 2007 to 0.4 percent in the first half of this year.

Because of this, several commercial industries have been affected, including the retail, manufacturing, and service industries.

Total consumption also dropped from 5.9 percent in the first quarter of 2007 to just 0.8 percent in the same period in 2009.

But OFW remittances continued to boost the country’s commercial industries. Despite a 2.8 percent decrease, it still continues to grow at a “very low rate,” Paderanga said.

“[But] we are relatively better off in economic growth than our neighboring countries,” he added.

Another sign that the country’s retail industry is set to improve is the revival of consumer credit.

“Consumer bank lending actually has started to increase again and that means there’s more credit available,” Paderanga said, noting that the industry has had reduced access to credit in 2008 because of the crisis.

For his part, Philippine Retailers Association chairman Jorge Mendiola said consumers have also adjusted to the financial crisis.

“Consumers have begun to buy wisely, cautiously. Most are keen on value-for-money purchases. Overseas remittances continued to flow, helping support consumer spending,” he added.

Rowena Tomeldan of Ayala Malls, meanwhile, said Filipinos are still opening their wallets and continue to shop.

“The opportunity lies in rising above the clutter to attract the attention of the shoppers who are already in the malls,” said Tomeldan, who noted a shift in consumer behaviour.

“They are more into comparative shopping, patronizing brands that have a solid track record. The opportunity lies in staying relevant and sensitive to the needs of the market.” –Abigail Kwok, INQUIRER.net