RP improves ranking as retail center

The Philippines’ market attractiveness to global retailers climbed three notches this year because of the growing outsourcing sector and remittances, according to A.T. Kearney.

In its latest Global Retail Development Index (GRDI), the consulting firm said “a strong retail outlook leads the Philippines to 22nd place” this year out of 30 top destinations.

The country was ranked 25th last year.

The annual study ranks the top 30 emerging markets on the urgency for retailers to enter the country.

The scores are based on 25 variables across four primary categories: economic and political risk; market attractiveness; market saturation; and time pressure.

The report said the drivers of the retail sector are the growing out-sourcing industry and remittances from overseas workers, which have bolstered spending.

“The national election may lead to more government spending and business investment, while the Retail Trade Liberalization Act will increase retail competition both domestic and foreign,” AT Kearney said.

It said an increasing number of dual-income, middle-class families and young professionals are stimulating urban retail sales—with roughly half of all retail sales concentrated in Manila.

Outside major cities, AT Kearney said the Philippine retail sector remains dominated by small, independent shops and grocers called sari-sari stores, which account for 90 percent of the country’s outlets.

China topped the index, followed by Kuwait, India, Saudi Arabia, Brazil, Chile and United Arab Emirates. Other Asian countries that figured in the poll were Vietnam at 14th; Indonesia, 16th; and Malaysia, 17th. Thailand, South Korea and Taiwan were excluded in this year’s list.

“Throughout Asia-Pacific, the post-recession outlook is bright, with domestic demand and exports increasing, retail sales and consumer confidence improving,” AT Kearney said.

The report noted that the grocery still accounts for almost two-thirds of total organized retail sales, but the proportion of spending on food is declining annually as consumers increase discretionary spending on clothing, transportation, communications, appliances and recreation.

Hypermarkets and convenience stores are the formats of choice, but local competition is fierce, it added. –Darwin G. Amojelar Senior Reporter, Manila Times