THE Philippines ranked first in retail e-commerce growth in 2022 among Southeast Asian countries, posting a 25.9-percent growth, according to an Asian Development Bank (ADB) report.
The ADB report, published in November 2023 with the title “E-Commerce Evolution in Asia and the Pacific: Opportunities and Challenges,” noted that although the e-commerce ecosystem in the Southeast Asian subregion is still “nascent,” the market has been growing rapidly and outpaces the rest of its Asian neighboring countries.
Citing a 2022 report by Cramer-Flood, ADB said the subregion’s growth of 20.6 percent in retail e-commerce in 2022 “stands out” among all other economies and regions globally.
In addition, it noted that only four economies reported faster growth rates than the combined figure of Southeast Asia. Two of these, however, still belong in the subregion, namely, the Philippines and Indonesia, ADB said.
“The Philippines, on the other hand, ranks first in retail e-commerce growth in 2022, posting 25.9-percent growth.
Five economies within the region—Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam—will rank among the top 10 markets worldwide measured by retail e-commerce sales growth by the end of 2022,” ADB noted as it cited the 2022 Cramer-Flood report.
he multilateral institution pointed out that the subregion’s rapid growth is “largely driven” by a spike in digital consumers since the pandemic began.
In fact, ADB said according to Meta, Facebook estimates that since the start of the pandemic, 70 million people in Southeast Asia have become digital consumers, with about 30 million joining those ranks from 2020 to 2021 alone.
Further, a 2021 Google report noted that the aggregate internet penetration in Southeast Asia grew to 75 percent by the end of 2021, ADB said.
“In 2022, there were about 516.5 million internet users in Southeast Asia alone,” ADB noted, citing Statista.
Meanwhile, in terms of retail spending, ADB noted that Singapore continues to pose the highest per capita e-commerce spending at $772.25 per capita in 2022, from only $389.8 per capita in 2019 or pre-COVID 19 pandemic.
This, ADB noted, is almost three times the e-commerce spending in Thailand, which is at $273.4 per capita. Meanwhile, exponential growth from prepandemic levels is seen in Malaysia, whose spending per capita increased from $112 in 2019 to $200 per capita in 2022.
For Indonesia, its spending per capita soared from $66 per capita in 2019 to $207 per capita in 2021 while the Philippines, at $60.3 per capita and Viet Nam, posting $153 per capita, lagged in 2022, the ADB report noted
Filipinos have increased their budgets for holiday shopping in online channels given the convenience, exclusive discounts, and range of offerings, according to marketing technology provider InMobi.
The InMobi 2023 Holiday Retail Guide for Advertisers showed that 57% of local holiday shoppers have increased their budgets for online shopping, yet it noted 43% have less than P10,000 in budget.
It added that 35% have a budget of P10,000 to P25,000, 13% can spend P25,000 to P50,000, and 5% eye running through over P50,000.
“They pick mobile for its convenience and physical stores for tangible product experiences and assurances,” InMobi said on holiday deal sources.
On one hand, respondents preferred shopping on mobile due to the convenience of ordering (72%), app-only discounts (60%), and ranges (47%), InMobi noted.
These included purchases in clothing and accessories, health and beauty, hobbies, and gadgets, it added.
On the other hand, in-store shoppers cited getting to see or try the product (96%), lesser chances of buying the wrong product (82%), and in-store offers (60%) as their top reasons, InMobi said.
It mentioned home appliances and improvement, gadgets, gift packs, and holiday-focused groceries as top in-store purchases.
InMobi noted peak shopping activities in double-digit festivals, such as 11.11 and 12.12, as opportunities for shoppers to explore and purchase, which brands must take advantage of.
“It starts with being present with those who have already started exploring,” it said on tips for brands. “With mobile emerging as the top shopping channel, it is important to create experiences that engage the holiday shopper at every touchpoint.”
InMobi suggested online retailers leverage technology, such as interactive camera filters and personalized mobile-first experiences, to engage with shoppers.
“Understand them and decode their online and offline behavior,” it said. “Evoke engagement throughout their shopping journey by being on the destinations they love.”
“Drive delight with innovative and engaging mobile experiences that inspire action.”
Additionally, the report showed that 55% of Filipino shoppers are category explorers, 38% are brand lovers, and 7% are bargain hunters.
“More men exhibit love for brands, while more women are hunting for the right deals,” it said on holiday shopper personas in the Philippines.
The InMobi 2023 Holiday Retail Guide for Advertisers sampled 1,000 mobile users across the Philippines, Indonesia, and Singapore between Sept. 12 and 18.
Food and beverage (F&B) products dominate the Top 10 Most Chosen FMCG (Fast-Moving Consumer Goods) Brands by Filipinos in 2022, according to an analysis by Kantar, world’s leading data, insights and consulting company.
Kantar Philippines’ Worldpanel Division Client Manager Bea D. Coronel, on Friday, Sept. 1, presented during a virtual presser its Brand Footprint 2023, which shows the ranking of FMCG companies based on their Consumer Reach Points (CRP).
The analysis seeks to unravel the penetration or the proportion of households that buy the brand, and the consumers’ choice or the total number of times the brand is chosen by Filipinos within a 12-month period.
As shown in this year’s Brand Footprint, from October 2021-October 2022 data covering 5,000 households, Lucky Me ranks No. 1 FMCG brand picked by Filipinos in 2022, the same as last year’s report.
Based on Kantar’s data, 98.9 percent of neighborhood households—or about 27.4 million shoppers—bought Lucky Me. The brand was chosen by these households 911 million times annually, or 33 times on average.
Coffee brands Nescafé (688 CRP) and Kopiko (627 CRP) are in second and third place, respectively. With 585 CRP, Silver Swan, a staple in Filipino cooking, is ranked fourth. Coca-Cola, a soft drink company, received 488 CRP to place in the top 5.
Coronel claims that the Brand Footprint tries to record a crucial time when Filipinos make their FMCG purchases.
“Filipinos have been spending more for their FMCG needs, especially in 2022 when we came out of the pandemic and our lifestyles began to shift and return to normalcy. There is now a higher demand for FMCG and companies must be able to capitalize on that split second when shoppers decide and choose one brand over another. At Kantar, we capture that powerful moment using the CRP measure in order to reveal which brands are consistently winning their way into the shopping baskets of Filipinos,” said Coronel.
Other F&B goods that made it to the list are Bear Brand (6th with 482 CRP), Maggi (8th with 431 CRP), Great Taste (9th with 424 CRP), and Datu Puti (10thwith 406 CRP). While Surf earned 467 CRP in seventh position, the only home care brand to break into the Top 10.
Coronel also showed that 61 percent of the nation’s brands are expanding despite inflationary pressures. The majority of companies, from small brands to super brands, are gaining high penetration in Filipino households. Interestingly, 57 percent of small brands—those that reach fewer than 10 percent of Filipino consumers—have seen growth in the previous 12 months.
“When brands grow bigger, they are likely to increase in reach through a combination of penetration and frequency… When combined, these two factors allow brands to win and gain more loyal shoppers,” she interpreted.
In 2022, 96 percent of winning brands expanded through wider penetration, with 57 percent through higher penetration and purchase frequency, and 38 percent through penetration alone.
Kantar further provided a list of four growth levers that companies may utilize to keep their penetration rates stable despite an expanding population. This includes more presence (increasing the number of locations close to customers), more categories (expanding the range of available products to draw customers), innovation (adding new variants to meet changing customer needs), and more moments (continuing to be relevant and accessible at as many points of consumption as possible).
She also noted that FMCG companies gain competitive CRP and make the Top 10 Most Favored companies list of Kantar’s Brand Footprint report have more chances of dropping in Filipinos’ shopping baskets.
The Philippines climbed three spots to 43rd out of 87 countries with an overall score of 26.4 (out of possible 100) in the latest annual rankings of Best Countries by US News and World Report. The report ranks the countries based on how the world perceives them in terms of qualitative characteristics — impressions that have the potential to drive trade, travel, and investment, and directly affect national economies. Despite the improvement in its placement in the rankings this year, the Philippines placed the fourth lowest in the region.
The impact of the pandemic on retail sales across markets in Asia Pacific varied greatly in 2022. The impact was largely dependent on each country’s COVID-19 situation, containment measures adopted, and the approach taken towards an endemic future.
Retail offline sales slumped in China by 4%, in absolute dollar terms, as lockdown policies contributed to a decline in in-store foot traffic. Conversely, markets such as India (+14%), Indonesia (+10%) and South Korea (+4%) experienced healthy growth and revenge spending due to the resumption of pre-pandemic lifestyles and social activities. Retail channels such as apparel and footwear specialists, beauty specialists and vending benefited from the recovery of international travel and geographic mobility of consumers.
Retail e-commerce largely continued its strong growth in Asia Pacific in the wake of the pandemic, driven by merchant digitalisation and consumer habit persistence
The wide disparity in e-commerce development across Asia Pacific has resulted in differing strategic priorities and initiatives by brands and retailers.
Across developing Asia, e-commerce marketplaces offer a convenient and accessible option for retailers in their digitalisation journey. Platforms such as Daraz, Lazada and Tokopedia are popular among consumers in South and Southeast Asia due to their ease of use, wide product range and regular price promotions.
In developed markets, the focus has shifted towards innovation in meeting increased consumer expectations in e-commerce, such as product assortment and fulfilment flexibility. In South Korea, Shinsegae’s SSG.COM is implementing a “premium strategy” by introducing official stores of luxury brands on its platform, such as Gucci, Ferragamo, Burberry and Montblanc. Its competitor, Naver, is redefining consumers’ delivery expectations by launching its “Naver Guaranteed Delivery Programme” with CJ Logistics to provide overnight delivery to over 90% of South Korea’s regions.
Livestreaming and social e-commerce continue to thrive due to greater social media usage and high mobile penetration
Increased social media usage since the pandemic and high mobile penetration rates have provided a conducive environment for social commerce to flourish. In China, social media platform Douyin, owned by ByteDance (which also operates TikTok and popularised short-form video globally) allows merchants to match the interests and video preferences of the platform’s more than 600 million daily users with their product offerings for a tailored shopping experience.
Livestreaming, private traffic, key opinion leaders (KOLs) and consumers (KOCs) have also been critical in China in allowing retailers to reach and sell to consumers online. Similarly in India, leading e-commerce players such as Amazon and Flipkart have also launched livestreaming platforms, allowing brands to showcase products and build closer relationships with users.
Focus shifts towards experiential retail concepts that are augmented by technology
Consumers have returned to stores post-pandemic to find revamped outlet concepts that showcase the relevance of the physical store.
Experiential retail is taking centre stage as brands highlight their stores as more than a place to transact, but also a place where consumers can indulge in unique and memorable shopping experiences
Technology is also being used for a more customer-centric purchase experience in-store. Watsons’ “The Grand Store” in The Philippines utilises artificial intelligence (AI) and augmented reality (AR) as in-store tools to help consumers analyse their skin conditions or virtually try on cosmetics, helping consumers to find the most suitable products and be more confident in their purchase decisions.
Renewed focus post-pandemic on the environment and personal wellbeing in retail
COVID-19 has slowed down the pace of life and shone a spotlight on personal health and wellness, driving sustained sales through pharmacies and health and personal care stores. Preference for sustainable products has also grown, with retailers similarly placing greater emphasis on addressing environmental concerns through consumer education and in their retail operations. For example, AEON Group in Japan opened a store which runs on 100% renewable energy, with the aim for this concept to expand, and an end goal of achieving zero aggregate CO2 emissions from its stores by 2040.
Retailers must adapt and innovate to meet the new expectations of consumers
The post-pandemic Asia Pacific retail landscape remains competitive. There has never been a greater array of choices across physical and digital channels, and technology and online tools will continue to transform the way retailers engage and sell to consumers. Retailers across the region are certainly facing new and unprecedented challenges, but those that are able to turn these challenges into opportunities are well-placed to remain the preferred shopping destinations of consumers.
Rankings Spotlight – Top 10 Fastest Growing Retailers in Asia Pacific 2022
Sea Ltd stands out through hyper-localisation, competitive prices, and the extensive product range of its Shopee Marketplace
Sea Ltd ranked second in our list of fastest growing retailers in Asia Pacific, with sales growth of 43% y-o-y in 2022. According to Euromonitor International’s Retail research, Sea Ltd achieved USD43 billion in retail value sales in Asia Pacific in 2022.
Shopee is Sea Ltd’s flagship mobile-first e-commerce marketplace, which operates across seven Asia Pacific countries. It offers products in major categories from both third party merchants and official brand-owned e-stores, such as Shopee Mall.
Shopee is best known for its monthly sales and super brand days (exclusive partner-brand 24-hour sale events where the brand’s products highlight discounts, promotions and occasionally exclusive launches). It differentiates itself via its hyper-localised sites and marketing campaigns, competitive pricing and extensive product range. The Shopee app also includes livestreaming capabilities and interactive games (such as Shopee Farm) to drive consumer engagement.
Shopee is an attractive destination for third party merchants seeking to reach millions of e-commerce consumers across Southeast Asia and Taiwan, due to its high brand awareness and strong merchant support in driving sales via marketing and consumer engagement tools. Shopee has also expanded into adjacent services, such as food delivery and payments, to encourage continuous consumer reliance and spending on its platform.
Nitori sails through the post-pandemic era with aggressive regional expansion
Nitori is a leading home products specialist hailing from Japan. The retailer internally manages its vertical supply chain, which allows it to control an entire process from planning, manufacturing, distribution and retail, ensuring product quality and minimising external costs incurred.
The retailer has constantly expanded its footprint outside of Japan to markets such as Mainland China and Taiwan. In 2022, it opened its first outlets in Southeast Asia, in Malaysia and Singapore. Southeast Asia is home to the steady demand for homewares and home furnishings due to healthy economic growth and increase in number of households. Nitori has adroitly identified this opportunity in a rather fragmented industry.
Nitori plans to accelerate further penetration in overseas markets with 77 new outlets in the pipeline to open in the new fiscal, including entering other Southeast Asian countries, such as Thailand and Vietnam, where the retailer has operated production facilities for nearly two decades.
This will make it the fourth-largest e-commerce player in the region by gross merchandise value (GMV), behind Tokopedia with 13.9 per cent, Lazada at 17.7 per cent, and Shopee, which is set to top the market with a 46.5 per cent share of GMV.
The consultancy said this market share estimation is based on two factors – that TikTok reaches its GMV target of US$15 billion in South-east Asia in 2023, and that the other e-commerce players continue to see growth rates similar to 2021 and 2022.
In a report on Monday (Aug 21), Momentum Works noted that TikTok Shop has shown “impressive” growth in South-east Asia, and the region also makes up most of its global GMV. TikTok Shop’s business grew from US$0.6 billion in GMV in 2021 to US$4.4 billion in 2022, and is set to reach a US$15 billion target in 2023.
“This will put TikTok Shop in the same league as established players Lazada and Tokopedia,” Momentum Works said.
The consultancy derived its data from interviews with platforms, logistics and payment players in each country in the region, as well as consumers and other ecosystem stakeholders. These were then cross-checked with numbers disclosed by platforms and calibrated to obtain the final numbers.
The report’s coverage of e-commerce included key marketplaces such as Shopee, Lazada and TikTok Shop, and excluded brands’ own platforms in the online retail market.
TikTok Shop has operations in all major South-east Asian markets – Singapore, Indonesia, the Philippines, Vietnam, Malaysia and Thailand – as well as in the UK, US and Saudi Arabia.
Momentum Works highlighted four characteristics of TikTok Shop that distinguish it from other e-commerce players.
First, unlike standalone e-commerce apps, TikTok Shop is an in-app feature of a social media platform. This means that it enjoys natural traffic via TikTok, which exceeded one billion monthly active users globally in 2022. This helps TikTok Shop save on costs to acquire and retain users.
Second, TikTok’s e-commerce sales are also mainly driven by recommending content to its users, in contrast to conventional marketplaces where users search for products.
Third, the platform is content-driven, with creators and multi-channel networks playing vital roles in the ecosystem.
Fourth, TikTok Shop does not have payment and fulfilment infrastructure, although it is working in that direction. Reuters reported earlier this month that TikTok is in the process of obtaining a payment licence in Indonesia.
In China’s e-commerce market, TikTok’s sister company Douyin and Chinese agriculture-focused online retailer Pinduoduo are already making waves. Within six years of their moving into the market, Alibaba’s market share had shrunk from more than 80 per cent to less than 50 per cent, according to Momentum Works.
While TikTok Shop is fast emerging as a serious contender against incumbent e-commerce majors such as Shopee and Lazada in South-east Asia, Momentum Works also sees TikTok competing with Amazon in the US and Middle East.
“Ultimately, change is the only constant. Whether TikTok Shop is a threat to incumbent platforms might not be a standalone question at all,” said Weihan Chen, Momentum Works’ insights lead.
“The bigger narrative is that in e-commerce, where leading players seem to have a network effect and structural advantage, disruption can still happen, and the incumbents should always remain focused and vigilant.”
ALMOST SEVEN out of 10 Filipinos are more worried about rising grocery prices than the possibility of another pandemic, a report by marketing data and analytics company Kantar showed.
“When we asked our respondents what concerns them most, top of the list and on top of their minds would be rising grocery prices… They’re even more scared of the rising grocery prices over another pandemic crisis from happening again,” Laurice Padlan-Obana, Kantar Philippines Worldpanel Division Consumer and Shopper Insight director, said during a virtual briefing on Wednesday.
Kantar’s Shopperscope 2023 report showed that 67% or seven out of 10 Filipinos are more concerned with rising grocery prices, while 50% were worried about another pandemic and 44% were concerned over higher fuel costs.
The survey used for the Kantar report was conducted from February to April and covered 2,000 households across the Philippines.
Inflation peaked at 8.7% in January, as prices of food and fuel continued to surge. Since then, the consumer price index slowed to 8.6% in February, 7.6% in March and 6.6% in April.
Kantar said Filipino consumers were also concerned over the impact of climate change (39%), possible fuel shortages (34%), physical and mental health of self and others (30%), future financial security (30%), political conflict with other countries (28%), economic outlook of the country (24%), and food shortage (23%).
However, most Filipinos remained hopeful in the next 12 months, with only 8% of respondents expect their situation to worsen.
Ms. Padlan-Obana said more Filipinos are putting more emphasis on price and affordability when choosing where to purchase grocery items.
Consumers are also looking for stores with longer hours and quick checkouts as they return to their regular routines, she added.
The Kantar report classified Filipino shoppers into three groups — “struggling” or those who are unable to cover their expenses; “managing” or people who finds ways to make both ends meet; and “comfortable” or those who have the least budget constraints.
“The ‘struggling’ are foremost concerned about rising prices and another pandemic happening. The ‘managing’ shoppers are concerned about the same things as struggling shoppers. The ‘comfortable’ are not only concerned about rising prices of goods but also about their health and their financial security in the future,” Ms. Padlan-Obana said.
She noted majority of Filipinos are those that can find ways to make ends meet, which means they have a lot of discipline when making purchases.
Ms. Padlan-Obana said fast-moving consumer goods brands and retailers should understand the shopping behavior and preference of these shopper groups.
All three shopper groups buy their grocery items at hypermarkets, supermarkets, groceries, sari-sari stores, convenience stores, drug stores, and direct sales, with varying levels of frequency and loyalty.
“The way to win them is communicating how they can save and maximize value in what they are paying for,” Ms. Padlan-Obana said.
The report also showed 68% of Filipinos plan their trips with a budget and grocery list. “Comfortable” shoppers also bring their families along during grocery shopping while “struggling” shoppers typically go by themselves.
“Shoppers go to hypermarkets and supermarkets in a purposive and deliberate manner. It is highly planned, going straight to the aisles to look for where items on their list are found,” Ms. Padlan-Obana said.
The report also showed Filipinos are visiting sari-sari stores more often, with a 5% annual increase to 212 trips. Nearly all or 99.7% of households buy from sari-sari stores, Kantar added.
MANILA, Philippines – Lucio Co’s Puregold Price Club is expanding its foothold in the Greater Manila Area through the acquisition of 14 stores of DiviMart supermarkets.
The deal will instantly convert all acquired DiviMart locations to Puregold under a sublease transaction.
These 14 stores are located in:
Angat, Bulacan
Pandi, Bulacan
Morong, Bataan
Cabanatuan City, Nueva Ecija
Olongapo City
San Isidro, Taytay, Rizal
San Miguel, Pasig City
General Trias, Cavite
Bacoor, Cavite
Cabuyao, Laguna
Tayuman, Manila
Aliaga, Nueva Ecija
Taytay, Rizal
Pulilan, Bulacan
An additional 18 DiviMart locations will be evaluated for possible conversion to Puregold stores, according to Puregold’s stock exchange filing.
DiviMart is a Filipino supermarket chain founded in 1989 by Harry Uy and Vivian Ong Juanitas. It has over 30 branches nationwide and is known for its affordable goods.
Puregold told regulators that the acquisition is below 10% of the company’s book value.
“The parties are still finalizing the definite consideration for the contemplated transaction because the evaluation of store locations, improvements, furniture, fixtures, equipment, and merchandise inventory is still ongoing,” Puregold said.
As of end-March, Puregold had a total of 531 stores nationwide – 456 Puregold stores, 23 S&R Membership Shopping Warehouses, and 52 S&R New York Style QSRs.
Puregold’s consolidated net income went up 12% to P2.4 billion in the first three months of 2023.
Net sales for the first quarter rose by 15% P44.4 billion. Puregold Stores contributed P30 billion while S&R Warehouses contributed Php 14.4 billion. – Rappler.com
