In today’s retail environment in the Philippines, going big doesn’t guarantee big growth anymore. Similar to many markets, small store formats like smaller supermarkets and convenience stores have expanded to move closer to residential areas and high traffic areas to cater to shoppers’ busier lifestyles. Propelling the growth of small format stores is the increasing influence of four global megatrends which are supporting the growing consumer demand for faster and more convenient shopping experiences—urbanization, women joining the workforce, shrinking household size, and the rise of eating out. The flourishing business process outsourcing (BPO) segment also stimulates the growth of this retail channel.

In fact, in the last five years, small store formats of supermarket chains have grown close to 220 stores in 2013 to more than 410 stores as of Q1 2018 as these big supermarket chains are focusing on expanding their small format stores.   

Convenience stores, on the other hand, also continue to proliferate. In 2013, there were only more than 1,620 convenience stores in the country versus close to 4,300 convenience stores as of Q1 2018.

This channel has shown rapid expansion, growing at 20% in store count in 2017 and 15% the year before that.

Small format stores are modern trade stores which appeal to today’s modern day, on-the go shopper. Neighborhood supermarkets, mini marts, and convenience stores all fall under the small store category.

Small format stores meet a distinct shopper need of convenience as they are often situated near homes or on their way to or from their homes. As such, it is no surprise that small-store format shoppers value stores that deliver on convenience-related elements. In Nielsen’s latest Shopper Trends report, shoppers were asked to rank attributes that influence store loyalty and store choice. These attributes correspond with four key factors:

• Convenience
• Choice
• Shoppability
• Price

In the report, five of the top 10 attributes that small store shoppers identified as important pertain to convenience. This makes it critical for retailers in this channel to deliver on the promise of convenience in every way possible, i.e. in terms of location, operation hours, store layout and overall in-store experience. Manufacturers as well play a part in ensuring small store shoppers are satisfied, by working with the retailer to create a seamless, pleasant shopping experience for shoppers.

The report also debunks the myth that price doesn’t matter to small store format  shoppers. In other markets, shoppers trade off higher price for convenience but it is not the case in the Philippines. Here, small store shoppers have ranked price-related attributes high in the list. To address this shopper preference, retailers and manufacturers should price products close to the prices of bigger stores. Carrying products that sit on lower-priced tier and offering value through promotions can also woo shoppers to visit more and increase their spend.

For more information about the report, contact your Nielsen representative.