Puregold ramps up expansion

MANILA, Philippines - Lucio Co-controlled Puregold Price Club Inc. is embarking on another aggressive retail expansion next year as it prepares to ramp up the opening of new stores under existing brands as well as commence with the store rollout of its foray into the convenience store business.

Puregold president Leonardo B. Dayao said the company is scaling up its capital expenditure budget next year to P5.5 billion from the P3 billion spending programmed this year.

The country’s second largest grocery chain, however, may have to spend much more than the P5.5 billion allocated for 2015, given investments to be spent for the chain of convenience stores it is putting up in partnership with Japanese convenience store giant Lawson Asia Pacific Inc.

Dayao said Puregold and its Japanese partner intends to open 50 Lawson stores next year at a cost of about P5 million to P6 million each. Total investments for the 50 stores may reach up to P300 million.

Under an agreement signed last June, Puregold and Lawson would jointly build and operate the Lawson convenience stores in the country wherein the former would invest 70 percent in the joint venture, while the latter would own the remaining 30 percent.

Dayao said the first of the planned 50 chains for next year would open by February. The outlets are targeted to open in central business districts and university belts in Metro Manila.

The first store would officially mark the entry of Lawson into the Philippine retail market as well as Puregold’s foray into the convenience store business.

“The first 200 stores will be company-owned, and then after that we will consider franchising,” Dayao said.

“We’re still maintaining the 500 stores target in five years because when we do franchising, the pace of opening may be faster. So we will wait until the brand has been accepted,” he added.

Of the P5.5 billion budget allotted for next year, Dayao said P2.5 billion is being earmarked for the expansion of Puregold. The company plans to open 25 new stores next year to add to its over 230 Puregold outlets by yearend.

Dayao said eight to 10 of the 25 stores planned for next year would be put up in the Visayas and Mindanao.

To date, he said five new locations in the Visayas and two in Mindanao have already been identified for next year.

“I think we are in a very good competitive position. All the big names in the retail market are in the middle market. The only one that is really focusing on the lower income group I think is only us. So I think we have a very good competitive position for Puregold,” Dayao said.

Aside from the Puregold Supermarket, the company is also set to open two new S&R stores next year for P1.5 billion to add to its existing nine outlets.

The company plans to open two new S&R stores annually for the next five years.

Of the two upcoming S&R outlets next year, Dayao said one would be opened in the Visayas, either in Bacolod or Iloilo, while the other would be in Luzon, either in Batangas or Laguna.