ALI builds retail portfolio with strategic partners

MANILA, Philippines - Property giant Ayala Land Inc. (ALI) is intent on developing its retail portfolio through partnerships with established local and foreign brands, a top company executive said.

Specifically, ALI targets more than 100 FamilyMart convenience stores and the rollout of numerous department stores in the next five years, said ALI chief finance officer Jaime Ysmael.

“We believe that by tying up with the right partners, we should be able to compete more effectively,” he said.

For FamilyMart, ALI is leveraging on the success of the Japanese convenience store chain. FamilyMart is the second largest convenience store retailer in the world with more than 20,000 stores in eight countries including Japan, South Korea, Thailand, China and the US.

Ysmael said the company intends to put up “a couple of hundred stores.”

“It will have to be in the hundreds to be able to make a difference. It will necessarily so because we have hundreds of developments across the Philippines,” Ysmael said.

Early this week, ALI, through SIAL CVS Retailers Inc., signed a shareholders’ agreement with FamilyMart Co. Ltd. and Japanese conglomerate Itochu for the development and operations of FamilyMart convenience stores in the Philippines.

SIAL is a joint venture between ALI and the Rustan’s Group’s Stores Specialists Inc., which is one of the largest specialty retail firms in the Philippines.

Ysmael said the company will spend P80 million to put up 30 FamilyMart stores next year and about P300 million to reach more than 100 convenience stores in the next five years.

“The convenience stores are key elements not just of the malls but the office buildings, the residential condominiums, the communities that we have,” Ysmael said.

Moving forward, FamilyMart convenience stores will be open for franchising, Ysmael said.

The entry of FamilyMart in the Philippines will provide a challenge to dominant players MiniStop of the Gokongweis and global franchise brand 7-Eleven.

Meanwhile, Ysmael said ALI and the Rustan’s Group are developing a department store concept.

 “Our first store will probably be the department store at Fairview Terraces,” Ysmael said.

“Definitely we intend to roll that out quite fast as we expand our malls,” he added.

Specifically, ALI and Rustan’s will jointly own and operate the department store, which should typically have 10,000 square meters of shopping space.

“We will still have those relationships with existing partners. It’s just we want to have our own so we can move even faster than what we are currently able to do,” Ysmael said.

The partnerships will allow the property firm to be competitive with existing brands in the country.

For the moment, Ysmael said ALI will generate most of its income from its core business.

“[The retail business] is high volume, low margin so in terms of the actual contribution to the profitability, it will take a while until we have reached a critical mass,” Ysmael said.

ALI is into residential and office development, and shopping mall and hotel operations.

The property giant maintained its robust earnings growth, recording a 27-percent growth in January to September profits to P6.62 billion from P5.23 billion a year ago “on the back of the strong performance and margin improvement achieved by all of the company’s major business lines.”