BMI View: Growth in the Philippines ' retail market will be supported by rising wages and disposable incomes, with a young urban population keen to make aspirational purchases. We expect significant opportunities for expansion and new market entrants in urban areas, as lifestyles become more aspirational. However, opportunities diverge markedly between urban and rural areas. The overall low urbanisation rate , the country's geography and the relatively low incomes of rural dwellers mean that opportunities to expand outside the cities will remain limited.
|Headline Household Spending|
|e/f = BMI estimate/forecast. Source: National statistics office, BMI|
Key Trends & Developments
Total household spending is forecast to rise significantly between 2016 and 2020, from USD224bn to USD319bn.
The majority of household retail spending will continue to go towards essentials, with food and non-alcoholic drinks at 38.2% of total household retail purchases in 2016, followed by housing and utilities at 22.0%.
Through to 2020 we expect strong growth in spending in the health and transport categories, although health in particular will be from a low base.
Growth in opportunities for retailers will be supported by growth in the number of households by an average of 2.2% per annum between 2016 and 2020, to 26.0mn households.
Alongside this growth, net average household income is forecast to rise from USD6,897 in 2016 to USD9,586 by 2020, and the share of households earning above a net income of USD10,000 will to increase from 16.4% in 2016 to 31.9% in 2020, while the proportion earning USD5,000 or over will rise from 53.8% to 74.9%.
The key young adult (20-39 years old) demographic will experience strong growth, reaching 34.5mn in 2020 (up from 32.2mn in 2016).
Urbanisation rates will remain low and unchanged over our forecast period, at 44.3%.
In July 2016 the Philippines' Securities and Exchange Commission approved SM Investments Corp's plan to merge its retail businesses under the SM Retail Inc umbrella, which will have more than 1,300 stores in a range of retail segments.
In May 2016 Robinsons Retail Holdings acquired a 51% stake in The Generics Pharmacy, a franchise chain that aims to expand access to affordable medicines across the country.
Duty Free Philippines and Landmark Management Services are collaborating on the country's first luxury, duty free 'galleria-style' store in Manila. The store, due to open by May 2017, will house goods including high-end fashion, cosmetic and drinks.
The Philippines Retail Report has been researched at source and features BMI Research's independent assessment and forecasts for the retail sector. The report examines key drivers of retail sales growth and future prospects, including consumer spending and private sector investment.
BMI's Philippines Retail Report also examines the level of development and potential for growth of the retail sector, the commercial initiatives of major players, changing consumer demographics that influence demand and the regulatory environment. Key sub-sectors include mass grocery retail, autos, over-the-counter pharmaceuticals, computers and consumer electronics.
- Benchmark BMI's independent retail industry forecasts for Philippines to test other views - a key input for successful budgeting and strategic business planning in the Philippine retail market.
- Target business opportunities and risks in Philippines through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, plus a discussion of major industry developments and a snapshot of key short-term demand-driving macroeconomic movements.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the retail sector and within the broader political, economic and business environment.
BMI Industry Forecasts
There are four separate 5-year forecast modules in the retail reports. These are:
- Headline Retail Forecast: Total household spending (local currency and USDbn, % growth, % GDP, per capita, per household), spending by retail sector (food & non-alcoholic drink, alcoholic drink, clothing & footwear, housing & utilities, furnishings & home, health, transport, recreation, education, restaurants & hotels, personal care & insurance (local currency and USDbn, % growth, % GDP, % of total spending)
- Retail Sector Forecast: Breakdown of Food, Non Alcoholic Drink, Alcohol, Tobacco, Clothing, Footwear, Household Goods, Furnishings, Appliances, Glass and Tablewear, Household Textiles, Consumer Electronics, Garden Toys and Pets, Home and Garden tools, Personal Care, Personal Effects Spending (USDbn, % Growth)
- Household Income and Numbers Forecast: Number of Households (‘000, % growth); gross income per household and per capita; net income per household and per capita; tax and social contributions per capita; breakdown of household incomes – USD5000+, USD10,000+ USD50000+ (‘000, % of total); labour force, employment and unemployment (‘000, % change)
- Demographic Forecast: Total population; Babies 0-12 months; Young Children 0-4yrs; Children 5-9yrs; Young Teens and Older Children 10-14yrs; Older Teens 15-19yrs; Adults 21yrs +; Young Adults 21-29yrs; Middle Aged 40-64yrs (‘000, % growth, male, female); Urban Population (‘000, % population); Rural Population (‘000, % population).
BMI’s Retail Risk Reward Index
BMI’s Risk Reward Indices provide investors looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Provides a detailed country-specific analysis of the key trends and developments in the retail sector as a whole, as well as an assessment of the main drivers affecting the major retail segments including mass grocery retail, fashion, pharmacies, consumer electronics, home improvement and personal care. The market overview also considers the most effective store formats in a given country and the impact of these factors on the main international and domestic players’ development strategies.
This provides a brief overview of the key players in each subsection of the retail sector including MGR, Fashion, Home Improvement, Consumer Electronics, Pharmacies, and Department Store chains.
The Retail Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.