Retail sector sees recovery in 2010

CEBU, Philippines – Fueled by the three identified buffers in the retail industry, the OFW remittances, BPO, and tourism, the retail sector expects slight recovery towards the end of this year, and hopes to achieve recovery in 2010.

PRA national president Bernie Liu expressed this sector’s optimism during the 3rd Regional Retail Conference held yesterday at the Parklane Hotel, which was attended by over 200 retailers.

For the rest of the upcoming months, Liu said the retail industry will continue to battle with the challenges, brought about by the global financial uncertainty, however, players are expected to get a slight “relief” while the last three months of the year are generally the peak months because of the Christmas season.

He said the holiday season mode in the fourth quarter will boost the consumption expenses again among consumers, and the 2010 election year for the Philippines will strengthen the projected recovery of the sector.

However, he said retail players should expect a full recovery just like the high double-digit growth experienced in 2007, which considered as the banner year for retail industry in the country, but sectors’ growth will be evident starting next year.

 Achieving growth of more than 10 percent though is unlikely to be achieved by retail players, but an encouraging single digit improvement of sales performance is already good news for the retail sector, he said.

“We are all looking forward for 2010 as election will spur spending,” Liu said.

Although the global retail industry is severely affected by the economic crunch, Liu said the retail industry in the Philippines is lucky because it is saved by the three major “buffers” the growing OFW remittances, increased of BPO investments that will translate to high purchasing power of the market, and the “still” dynamic tourism industry.

Likewise, Marissa Fernan, SM Prime Holdings vice president for Visayas and Mindanao, echoed Liu’s positive outlook for the sector, saying the industry’s dynamism is being fueled by the three stable forces.

Fernan said although there were OFWs who were retrenched but they also came home with enough money from savings and separation pay that are invested in real estate, and basic necessities.

If an OFW decides to buy a house (and lot) as part of investment, the home furnishings, and basic necessities’ go up pushing growth of the retail sector.

“The outlook for retail sector is still positive, although we will not be experiencing good times like previous years, simply because we have stable market the OFW, BPO and tourism,” Fernan said.

A double-digit growth for some sub-sectors in the retail industry will be easily achieved, but it will be a “low” double-digit growth.

For her part, Ayala Center Cebu’s group head Clavel Tongco, the mall is even experiencing encouraging growth in the first quarter of 2009, a clear evidence that retail sector in Cebu is not badly affected as other countries, or other areas in the Philippines.

According to Liu, full recovery in the sector is still difficult to achieve, considering the unpredictable external factors that may affect the performance of retail business and buying appetite of the market.

Generally, the retail players attributed the sustained business, although thinning margin, due to the dynamism of the three “buffers” which are considered as “bread and butter” of the retail industry, amid the threatening financial environment.