SM strikes gold with Alfamart partnership

MANILA, Philippines - Mall, banking and retail conglomerate SM Investments Corp. (SMIC) of tycoon Henry Sy may have found a new gold mine in the form of minimarts.

In its latest report, leading online stockbroker COL Financial Group Inc. indicated that the SM empire would benefit further through its recently-forged partnership with Indonesian minimart giant Alfamart.

 “SM’s most recent partnership is with Alfamart, one of the leading operators of minimarts in Indonesia. With this partnership, SM will not only be accelerating its expansion in the provinces but also be the first mover in the minimart segment in the Philippines,” COL Financial said in its report.

With the minimart concept’s success in Indonesia, COL said there is no doubt that the minimart format would also become well-received in the country.

 “The minimart format is new in the Philippines but has been proven a success in Indonesia, a country with many similarities with the Philippines,” it said.

Minimarts have a smaller retail format that would not be in direct competition with the convenience store segment.

COL said the product selection in a minimart is different from convenience stores as the former carry fast-moving supermarket items  that are “ready-to-cook” compared to “ready-to-eat’ items in convenience stores.

It added that the pricing is also different as convenience store items are priced at a premium, while minimart items would be at parity with larger stores.

“Thus we can see that minimarts are an extension of the supermarket format and will greatly accelerate penetration of the formal retail sector,” COL said.

In July, SMIC partnered with Indonesian minimart operator Alfamart to open the first store in Trece Martires in Cavite. There are at present five Alfamart branches in the country, most of which are in the provinces.

SMIC earlier said it is putting up as much as four new Alfamart stores in the southern part of Metro Manila this year on top of its first three branches as part of efforts to test the market.

The local Alfamart stores occupy around 150 square meters of floor space, offering products ranging from basic groceries, fresh chicken, medicines and food-to-go options round-the-clock.

 “Alfamart Philipines still has no definite long term expansion plan as it is still in testing phase. Further evaluation will be made once it reaches critical mass of around 100 stores,” COL said.

 “Although the company has a positive view on the minimart segment, it will take years before Alfamart Philippines starts contributing to profits,” it added.

SMIC is the holding firm for the businesses of the SM Group, which is into real estate, retail and banking. The Sy family is also expanding in other areas such as energy and infrastructure.