Retail titans gobble up ‘small’ supermarkets
They had their glory days. Popular supermarket chains like Cherry Foodarama are about to be formally merged into the operations of retail giant SM of tycoon Henry Sy and Puregold Price Club Inc., as the two along with Robinsons Retail Holdings Inc. slug it out to dominate the industry.
Cherry Foodarama of the Ong family is the latest independent chain to be gobbled up by the contending retail giants, after Waltermart, Glori’s Supermarket, Parco Supermarket and Eunilaine.
SM Investments Corp.’s acquisition of Cherry Foodarama’s three supermarket outlets is already a done deal, with the signing of the financial transaction with the Ong family set to be completed shortly.
More independent chains that have become popular within Metro villages may follow the fate of Cherry Foodarama and Glori’s Supermarket, which has also been taken over by the SM Group.
SM Investments Corp. last week confirmed a report in this paper that it was in discussion with the management of Cherry Foodarama. “SM and subsidiaries are in discussion with the management of Cherry and both parties are in the process of signing formal agreements,” SM Investments said.
Only two of Cherry Foodarama’s supermarkets are operational—Cherry Foodarama Congressional in Quezon City and Cherry Foodarama Antipolo.
Cherry Foodarama Shaw was originally rescheduled to reopen on its original site along Shaw Boulevard in May, but it did not push through because of the entry of the new investor.
The SM Group remains the biggest supermarket chain in the country, despite increasing competition from other grocery chains such as Puregold of tycoon Lucio Co and Robinsons Retail of industrialist John Gokongwei.
SM’s retail operations had 279 stores of as end-March 2015, including 50 SM Stores, 40 SM Supermarkets, 43 SM Hypermarkets, 120 Savemore stores and 26 WalterMart stores.
SM’s retail group this year plans to open three SM Stores, three SM Supermarkets, 10 SaveMore stores and on SM Hypermarket.
SM’s purchase of Cherry Foodarama marks its second major acquisition in three years. In 2013, SM Investments forged a joint venture with the Waltermart group through its subsidiaries SM Retail Inc. and SM Prime Holdings Inc.
SM’s aggressiveness in part has been prompted by Puregold’s own expansion design. Puregold plans to acquire more supermarket chains in 2015, mostly those operating in Luzon.
Puregold marketing director Vincent Co has conceded that Puregold was in negotiations with several chains and single-propriety supermarkets.
“Acquisition and expansion will continue in 2015. There’s no letting up of expansion by competitors. And so are we,” he said.
Puregold’s latest acquisitions are Parco Supermarket, Eunilane Supermarket, Grocer-E and Sioland Supermarket in San Pablo, Laguna. It will build 25 new stores in 2015 with an estimated capital expenditure of as much as P3.5 billion.
Puregold now has 248 stores, including nine S&R stores, six S&R quick serve stores and 233 Puregold outlets. The company is rolling out 25 Puregold stores in 2015, half of them located in the Visayas and Mindanao.
“Expansion will be more of outside Luzon to Mindanao and the Visayas. We only have less than 10 Puregold stores in the regions. So we’re really focusing on bringing Puregold to VisMin,” another company official said.
The company also plans to put up 50 Lawson convenience stores in Metro Manila by 2015, in line with its target of 500 stores by 2020. Its joint venture with Ayala Corp. for another mall-based retail concept targets middle-income families.
Puregold Price lately acquired nine supermarkets in Luzon from NE Inc. of the Uy family. Cosco Capital Inc., the holding company of Co, also purchased five commercial properties from NE.
“The additional stores will also make Puregold the dominant retail player in the province of Nueva Ecija,” Puregold said in a recent disclosure.
Robinsons Retail, the second-largest multi-format retailer in the Philippines, meanwhile, has prepared for the competition
It operates in six business segments, including supermarkets and department and convenience stores (Ministop) and drugstores.
An expanding economy and the increasing disposable income and consumption in the Philippines will prompt the country’s retail giants to expand and preserve their market share.