TUESDAY, 20 DECEMBER 2011 21:21 IAN SAYSON / BLOOMBERG NEWS
PUREGOLD Price Club Inc. plans to double its grocery and hypermarket chain over five years as it challenges its only bigger rival, SM Investments Co., by targeting low-income shoppers and neighborhood stores.
The nation’s second-biggest supermarket operator plans to spend P10 billion to boost the network to 200 stores by 2016, its chairman, Lucio Co, said in an interview.
The outlets will target “market segments that the existing players aren’t serving,” Co said. “We want to be everywhere.”
The retailer plans to have 150 stores by 2013 as it intends to lure customers from the hypermarkets and groceries in billionaire Henry Sy’s 163-outlet SM retail chain, which includes 41 department stores.
Co has already doubled the number of stores since last year as a rebate of as much as 3 percent on purchases and a program offering to improve the stores of top buyers with signage and merchandizing jars attracted low-income shoppers and owners of so- called sari-sari stores, aka variety or convenience stores.
“Puregold’s success in the low-income retail market has attracted the attention of SM to the extent that SM is expanding rapidly its hypermarket and mini-supermarket formats,” Jojo Gonzales, head of research at Philippine Equity Partners Inc., said by telephone. “They have been successful at what they do and the potential is there for Puregold to become bigger.”
Puregold, which set up its 50th store in July 2010, will open a record 38 stores this year, the company’s president, Leonardo Dayao, said on Monday at a ceremony marking the chain’s 100th store opening. Puregold plans to add 25 stores next year.
“He is very focused, he knows his market and he executes well,” said Stephen Cu-unjieng, chairman at the Asia unit of Evercore Partners Inc. “I don’t think he’s already at his peak.”
Puregold fell 1 percent to P18.02 at close of trading on Tuesday. The stock has climbed 44 percent since its listing in October compared with a 14-percent advance for SM Investments and the benchmark Philippine Stock Exchange Index’s 13-percent increase in the period.
Co started Puregold in 1998 to absorb employees from a duty-free shop he operates in Clarkfield, Pampanga. The Asian financial crisis had caused a sharp depreciation in the peso, making it expensive to shop at Co’s duty-free shop.
Co considered cutting the duty-free shop’s size before deciding to branch into the wider retail business.
“I was never tempted to call it quits,” he said.
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