7-Eleven Philippines

Philippine Seven to continue expanding despite tepid performance of competition

CONVENIENCE-store operator Philippine Seven Corp., the local franchisee of 7-Eleven stores in the country, said it will continue to expand the number of its stores, despite the rationalization of operations of its competitors.

“The focus shall be further expanding our footprint even if there is reduced competitive activity, as we believe the market will continue to grow, and we are in best position to take advantage of this opportunity,” Jose T. Pardo, the company’s chairman and independent director, said.

Jose Victor P. Paterno, the company’s president and CEO, said he hopes to end 2019 with 3,000 branches, from the 2,386 branches as of the first half of the year.

Paterno said the challenge is to overtake the share of sari-sari stores in the country, which he said, quoting a study from Nielsen, still command a 33.3-percent market share as of last year. The entire convenience-store sector in the country, on the other hand, only had a market share of 3.3 percent, up by a mere 0.3 percent from 2016 figure.

“We consider that sari-sari stores are still our No. 1 competitor. Competition in convenience store is not about price war, it’s about size war. You kill each other over location. It’s all about trying to become the most convenient for customers, that’s where the battle is in the end,” Paterno said.

In 2013 a number of foreign-branded convenience stores entered the country. Most of them have since been rationalizing their operations—or closing down a number of branches—in less than two years after starting their operations.

FamilyMart, for instance, has been been sold by the Tantoco and the Ayala groups to Dennis Uy’s Phoenix Petroleum Philippines Inc. On the other hand, there is talk that Lucio Co’s Lawson convenience-stores business is already being put up for sale.

The SM Group’s Alfamart is still on expansion mode, but in the outskirts of city centers, while MiniStop is also rationalizing its operations.

Paterno said the company may add up about 100 more stores before the year-end, but the bulk of its expansion will now be in Metro Manila and nearby cities, picking up from where its competitors have left off.

In previous years, the company expanded in the Visayas and Mindanao, even building distribution centers, while its competitors put up stores in Metro Manila in almost every corner of the city center.

“Last year we went to Bohol, this year we went to Mindoro, later this year we’ll be going to Leyte, but these are smaller moves and not building new distribution centers. Mindoro, Bohol [are] too small for building a new distribution center,” Paterno said.

Paterno said the company is now working on data mining to track potential purchase of customers in their next visit.

He said the company is currently working with a number of data companies to help them device an artificial-intelligence (AI) program that will aid the company in predicting buyers’ next buying decision.

“Basically we’re figuring out AI. That’s in the last three years. Before, people [thought] this thing’s never gonna work. Now, look at Google Translate and look how good it is. I have no doubt that it will start figuring out stuff like what is the optimal assortment [for] each store, like what product should you carry in each store. How much of this product will be sold on a given day given this weather,” he explained.

For the first half of the year ending June, the company’s net income surged 19 percent to P533.2 million, from last year’s P446.4 million.

System-wide sales jumped 22 percent to P22.17 billion, from last year’s P18.07 billion.

Source: https://businessmirror.com.ph/2018/07/19/philippine-seven-to-continue-expanding-despite-tepid-performance-of-competition/