Biz Buzz: IKEA heats up retail price war
With the entry of more foreign competitors into the Philippines, Swedish furniture retailer Ikea seeks to stay ahead of the game by slashing the prices of its bestselling items in this market by about 20 percent.
And it’s not a time-bound promo but a permanent price reduction that started in March, covering the first 400 items, with 180 more items included this April, Ikea Philippines country selling manager Leontina Bucur told Biz Buzz in an interview.
“We know right now the inflation rate is high; interest rates are high; the wallet is shrinking for our consumers so we want to support and to continue our vision, which is to offer our range to many people here in the Philippines. So we want to reach more people by offering lower prices so everyone can afford,” Bucur said.
What do Pinoys typically buy from Ikea? The most popular items are plates, bowls, sack bags, bath maths, lint rollers, hangers and rice bowls.
Since the start of its fiscal year in September 2023 to present day, it has attracted around 2.3 million visitors to its store at the Mall of Asia complex. With a footprint of 65,000 square meters—including the back office and the warehouse—this facility is the largest in the world, and the office alone is bigger than their regional headquarters in Singapore. The digital platform is likewise bringing in more sales, even from Visayas and Mindanao.
Ikea, which had debuted into this market in November 2021 when strict pandemic lockdowns were still in place, currently sees about 20,000 in foot traffic at its lone store during the weekends.
Cognizant of stiff competition even in the digital space, Bucur said Ikea has likewise made nationwide delivery services more affordable to support sales growth outside Metro Manila.
One competitor that’s coming to town is Nitori, a Japanese furniture retailer that has its own following.
Bucur is confident that with the affordability and quality of Ikea products, along with the fun shopping experience that comes with its regularly refreshed showroom, the brand will continue to thrive in this market. Competition, bring it on! At the end of the day, Pinoy consumers are the winners. —Doris Dumlao-Abadilla
Tanco’s surprise visit
A surprise visit from your boss is not necessarily one of the things you look forward to at work. It is actually maybe human nature to feel a little jittery when a supervisor is suddenly around when you’re doing your job.
But this was not the case last week when tycoon Eusebio “Yosi” Tanco, chair of online gaming company DigiPlus Interactive Corp. (formerly Leisure and Resorts World Corp.), dropped by during a media briefing at the Manila Golf Club in Forbes Park last week. Tanco wasn’t listed as one of the speakers, so it came as a surprise, but a welcome one, when he arrived.
The event was briefly halted to acknowledge the businessman, who is also into port operation, education, health care and stock brokerage, among others. He had nothing but good words for Andy Tsui, president of DigiPlus.
Tanco praised Tsui for “taking the company to new heights.”
DigiPlus has more than 20 million registered users and is expecting to attract an additional 5 million to 10 million this year.
“I trust him,” Tanco added.
Banking on an optimistic outlook, the company earmarked this year as much as P2 billion for its capital expenditures, half of which will be invested in technology and game development.
Indeed, things are looking up for the operator of the 24/7 online bingo streaming platform BingoPlus. —Tyrone Jasper C. Piad
Unloved REITs? SSS makes a killing
High interest rates usually have the effect of pushing down the stock prices of real estate investment trust (REIT) companies, making this asset class less attractive under such economic conditions.
This was apparent when no new REITs were added to the local stock market last year amid the hefty anti-inflation rate hikes of the Bangko Sentral ng Pilipinas.
But while many investors shunned REITs in search of lower-risk, fixed-income securities to put their money on, the Social Security System (SSS) saw beauty in declining REIT share prices—and made a killing!
”It’s an opportunity to add,” Ernesto Francisco Jr., senior vice president of the fund management group of SSS, said in a recent interview.
That contributed to the revenue of SSS from its investment and other income to P53.08 billion in 2023, surpassing last year’s target of P36.31 billion by P16.77 billion.
And SSS is yet again counting on its stock market investments, including its REIT portfolio, to help it hit the target net income of “over P100 billion” for this year.
“REITs are one of our favorites. It’s a fantastic structure … we continue to accumulate while rates are higher,” Francisco said. —Ian Nicolas P. Cigaral INQ
