US crisis to trigger retail crash in 2009

Retailers in Cebu are bracing for a possible consumer-purchase slowdown next year, as the United States economic slump is gradually affecting the pockets of Filipino consumers.

Philippine Retailers Association (PRA-Cebu) newly elected president Melanie Ng said it is, however, still too early to see an actual slowdown in consumer spending as the months of August to October are typical "lean" months for retail trade.

Ng said the approaching holiday season would still be positive for the retail industry, but as early as now retailers have to prepare for the worst is yet to come by next year.

To cope with the foreseen retail crash next year, retailers are now mapping out efficient company operational system and cutting on operational expenses, among others.

Coffee retailer Steve Benitez, the owner of Bo's Coffee chain in the Philippines, said when the economy is being threatened, like what the world is experiencing today, they are forced to maintain very lean organization, and multi-tasking of employees is part of the cost-saving tools.

"Effective cost management is very important to implement specifically these days. If economy is bad we can't generate [good] sales and we have to expect thinner profit margin," Benitez said.

For his part, mobile phone retailer Junrex Holdings Inc. president Jun Yap said that the economic meltdown has already been felt by his businesses, saying if in the past, it was easier to generate P1 million sales disposing 1,000 units of cellular phones. Today, his stores have to sell at least 3,000 cellular units to raise P1 million sales.

Most consumers nowadays no longer mind getting low-end phones in order to save.

According to Ng, these times of difficulties, it is very important for the PRA-Cebu organization to provide effective support programs for its members.

She said there are a number of advocacies that are being prepared by the group in order for Cebuano retailers to cope with the projected consumer slowdown next year.

Part of which, she said is to guide small retailers, especially the start-up ones to implement proper merchandising system, proper Purchase Order Administration (POA) system, utilizing the Internet for promotional activities among others.

Ng, who owns diversified retail shops from computer gadgets through NGenius, lifestyle store chain Premium Concepts, among others, said that this time of difficulties, competition among members will be last concern, what is important now is to sustain their businesses, and survive.

PRA-Cebu, which is a newly organized group will have its 2nd General Membership Meeting and Induction Ceremony this coming October 29.

Retail icons in Cebu such as Penshoppe's Bernie Liu, Christopher Tio, Jay Aldeguer, Robert Go, Derek Dytian, Janel Gaisano, including Ng, Benitez, and Yap are the organization’s prime movers.

To date, PRA-Cebu has 40 members Ng said the organization is expecting to increase its membership base as more Cebuanos are venturing into unique retail concepts that have good potential to go national and international branding.