“The emergence of discount stores to challenge the dominance of big food retailers comes at an opportune time.”
Hard discount stores are gaining popularity in the Philippines against the backdrop of high inflation. They offer a practical alternative to consumers and compete in the food retail market dominated by the country’s three largest retail conglomerates.
Filipino consumers are reeling from inflation that has consistently topped their list of concerns in several surveys. In a poll conducted in March, 70 percent of those surveyed cited the need to curb the rising prices of basic commodities and identified it as the most urgent issue that the government needed to address.
With hardship comes the need to tighten belts and the corresponding effort to look for cheaper alternatives for basic goods and commodities, like drinking water, meat, condiments, laundry soap and snack items.
The emergence of discount stores to challenge the dominance of big food retailers comes at an opportune time. The Asian Development Bank (ADB) has taken notice of their rise and is giving financial support to at least one start-up chain.
An ADB report in March 2023 said the Philippine food retail market is concentrated, with the three largest retail conglomerates accounting for 51 percent of modern retail revenue and 38 percent of total food retail.
The discounter segment, meanwhile, is the least developed, with just three companies―Dali, O!Save Trading Philippines Corp. (more than 50 hard discount stores) and Puregold Price Club, Inc. (65 discounter stores).
Per the ADB study, food retail sales in the Philippines reached $19.2 billion in 2021, dominated by modern food retail (supermarkets and convenience stores) at $14.3 billion (75 percent). Traditional food retail (mom-and-pop stores) accounted for $4.8 billion in sales (25 percent), but represented 80 percent of total store outlets (30,900 out of 38,800).
The same ADB study noted that 43.8 percent of households in the Philippines from 2019 to 2021, or 48 million people, were moderately or severely food insecure, more than double the average for Southeast Asia (18.8 percent or 126 million people).
Dali’s expansion, according to the ADB, will address an important gap in the food retail industry in the Philippines while creating thousands of inclusive employment opportunities. The bank found the need to develop the hard discount retail model in the Philippines. Hard discount, says the ADB, is a proven and well-established retail business model that focuses on keeping product prices below market levels and sustaining profitability through high volume sales of a limited product range.
The ADB deemed that Dali was a suitable candidate for investment. The company, it says, requires additional growth capital to expand the network of hard discount stores in the Philippines, adding that the store contributes to food safety and security by offering essential products at lower prices, especially for low to middle-income households.
The ADB further noted that Dali would address the market gap in the Philippines and that it was primarily building stores in rural communities instead of malls, thereby supporting development in rural and peri-urban areas.
The initial success and ADB’s esteem of neighborhood grocery chain Dali, however, are being tainted by some consumer complaints about its alleged exploitative practices, especially on cheap goods that often look like knock-offs of established brands.
At first glance, these products look like great bargains, but a cursory look at the comments of Dali’s Facebook pages reveal a deluge of complaints about the quality of the products being sold on the shelves.
The issues include substandard products, items that taste like they’ve been sold past their expiry date, and low-grade packaging. Some customers complain of detergents that are harmful to their skin, chicken being sold with ice in them so that they weigh heavier when sold, and moldy bread products.
The quantity and frequency of the complaints online could be evidence that these are not isolated examples, but indicative of a problem that may afflict the whole Dali grocery chain―a glaring lack of concern for their customers.
In cases like these, consumers who are most affected by inflation––and often have no choice but to turn to stores like Dali in search of affordable options––are the biggest losers. Instead of buying bargain products that allow them to make the most out of their limited budgets, they are short-changed. And instead of saving money, they end up throwing their cash away.
The Malayang Konsyumer wrote the Department of Trade and Industry to seek consumer protection against the alleged abusive and negligent practices of Dali.
The group claimed that it was monitoring social media feedback in the publicly available pages of Dali Everyday Grocery to verify the complaints.
“With that, we were dismayed at the expanse of the complaints publicly made at the apparent inaction regarding these complaints. The lack of a corresponding response by DALI, as well as any corresponding measure that could have merited the imposition of regulatory sanctions is truly alarming,” says lawyer Simoun Antonio M. Salinas, spokesperson of Malayang Konsyumer.
Consumer protection is an overlooked element in the Philippines. Dali, perhaps, could cure this apathy and make itself an ally of our hard-pressed consumers.
E-mail: rayenano@yahoo.com or extrastory2000@gmail.com
