Retailers trim expansion plans on depressed spending
Retailers are tempering expansion plans this year as rising fuel costs, driven by the still-unresolved crisis in the oil-rich Middle East, begin to weigh on consumer demand and operating conditions.
In a recent interview, Philippine Retailers Association president Alice Liu said the war’s initial impact had been a pullback in spending, particularly after oil prices surged in March, prompting households to tighten budgets.
“Most retailers, both food and dry goods, basically had a good first quarter,” said Liu, who serves as CEO of Golden ABC Inc., which operates brands such as Penshoppe, Oxgn and ForMe.
“But when the crisis started … the knee-jerk reaction of consumers was that they would really cut back on spending,” she added. “Retailers are all feeling that now.”
This shift is already forcing companies to recalibrate expansion plans. At Golden ABC, Liu said the company had trimmed its store opening target this year to about 60 locations from an initial 87.
“We are a little bit more cautious assessing now how many of these stores are really necessary and spaces that we don’t want to lose,” she said.
To manage spillover effects from the crisis, retailers are also tightening operations, including reducing inventory levels and minimizing overhead costs, she added.
Liu emphasized that these are interim measures, and firms are holding off on more drastic adjustments as the situation remains fluid.
“We have to sit it out and wait for things to normalize because this is an initial knee-jerk reaction,” she said.
Franchising slowing, too
April has proven particularly challenging for retailers, Liu noted, as the first week of the month coincided with Holy Week, when consumers typically travel on vacation or back to their province, and mall foot traffic declines.
Beyond retail, franchise businesses are also feeling the impact of the crisis.
Steve Benitez, president of the Philippine Franchise Association and CEO of Bo’s Coffee, said the appetite among franchisees has softened.
Despite the near-term slowdown, Liu expects conditions to stabilize as fuel prices ease.
“With fuel prices rolled back, we are hoping that it will encourage a little bit more confidence,” she said.
For now, both retailers and franchisors are taking a cautious stance, focusing on preserving margins while keeping expansion pipelines intact.
“It will be tough, but at the end of the day, I think the ones that will get stronger are the ones who are doing it right,” Benitez said. “Maybe it will decelerate a bit, but it will still continue to grow.”
