Puregold ties up with Lawson of Japan

MANILA, Philippines - Lucio Co-controlled Puregold Price Club Inc. is entering the convenience store business via a partnership with Japanese convenience store giant Lawson Asia Pacific Inc., a move that is seen to further heat up competition in the retail sector especially with the expected integration of Southeast Asian economies.

In a filing with regulators yesterday, Puregold said it forged an agreement with Lawson to jointly build and operate convenience stores in the country.

Puregold will invest 70 percent in the joint venture while Lawson will own the remaining 30 percent.

This marks the entry of Lawson into the Philippine retail market, already dominated by convenience store giant 7-Eleven with more than 1,000 stores across the country.

Puregold, which had 213 stores as of the end of 2013, said the joint venture is part of a strategy to diversify its revenue base which includes supermarkets and retail drug stores.  The move is also aimed at leveraging the group’s local expertise in procurement and distribution.

For Lawson, the deal is seen to expand its presence in Asia which already includes Indonesia, Thailand, China and Japan where it operates 11,606 convenience stores.

Based on information posted on its website, Lawson, with a total workforce of 6,404, chalked up net sales of ¥19,453 billion.

More foreign brands are expected to enter the Philippines once Southeast Asian economies integrate in 2015, thereby creating a single market economy with free movement of goods, services and investments throughout the 10-member nations.

Puregold-Lawson is the latest group to plunge into the convenience store industry after the consortium of the Ayala and Rustans groups and Japan’s Itochu formed FamilyMart, which has been aggressive in expanding operations.

Aside from 7-Eleven, the Puregold-Lawson venture is also seen to meet stiff competition from MiniStop, the second largest convenience store chain in the country owned by the Gokongwei family’s Robinsons Retail Holdings and Japan’s Ministop Co. Ltd.

Retail operators have been beefing up their operations, setting up new stores and enterting new markets to capitalize on the Philippines’ rising disposable income levels and growing middle class.

Puregold  sees sales growing by 20 percent this year from the P73.2 billion registered in 2013 on the back of new store openings and the full-year contributions of new acquisitions.

It  intends to pursue more acquisitions to further expand its geographic footprint, which already included 52 cities and 50 municipalities

In the first quarter of 2013, Puregold acquired 15 E supermarkets with a net saleable area of about 370,000 square meters.