The number one retailer in the Visayas is rapidly expanding nationwide, challenging competitors to widen their product assortment, offer cheaper prices and operate for as long as 24 hours a day.
“Retail is in our blood. Ever since we were born, all of us were exposed to retail,” Frank Gaisano, the 60-year-old chairman and chief executive of publicly listed Metro Retail Stores Group Inc., says in an interview at Metro Market! Market! in Fort Bonifacio, Taguig.
Metro Retail, which built its first store along the historic Colon Street in Cebu City 35 years ago, now has 52 department stores, supermarkets and hypermarkets nationwide, including two outlets that are open 24 hours a day.
“We have over 9,000 employees. If you include vendors and staff from partners, probably we will be more than 15,000. Last year, we had over P30 billion in sales,” the five-foot-eleven executive says.
A study by market research company Euromonitor ranked Metro Retail as the largest department store and hypermarket operator in the Visayas in 2014. It was also the fourth largest retail operator in the country in terms of retail sales value.
“In the Visayas, we rank number one for department store and hypermarket and number two in supermarket. This is in terms of sales. Nationwide, Metro Retail ranks number four across all store formats. Out of the 52 stores nationwide, we have 29 in the Visayas, and the remaining 23 stores are located in Luzon,”says Anna Marie Periquet, Metro Retail’s vice president for corporate affairs.
Periquet, a former member of the House of Representatives who co-authored Adopt-A-School Act of 1998 and the revised Magna Carta for SMEs, says the three store formats are supported by ancillary businesses: Metro Gourmet café, Suisse Cottage Bakeshop, Metro Pharmacy and Food Avenue.
Gaisano says the company is on track to achieving its target of doubling the retail footprint in terms of gross floor area by 2020, from the 2011 level when Metro Retail held an initial public offering and listed with the Philippine Stock Exchange.
“We were on track of our target. Although our expansion is not that much this year, but next year, it is gonna catch up because we will open a lot of big stores. In terms of gross floor area, we will be able to achieve our target,” says Gaisano who has a Bachelor’s degree in Civil Engineering from Cebu Institute of Technology.
About 60 percent of the 52 stores are located inside the properties owned by Vicsal Development Corp., the Gaisano family’s holding company. “Vicsal came from my father’s name Victor and my mother’s name Sally. When Victor met Sally, we became Vicsal,” says Gaisano.
Gaisano says more 24-hour hypermarkets will rise in the coming years. “We had our recent opening in Tagaytay, which is our second 24-hour store. The first one is in Resorts World. When we went to Tagatay, we found out that it was very hard to look for anything to buy in the evening especially for tourists who don’t sleep. So we opened a 24-hour hypermarket,” says Gaisano.
Periquet says the 24-hour Super Metro Hypermarkets are strategically located at Metro Plaza 66 Newport in Paranaque City and Fora Tagaytay Mall along Emilio Aguinaldo Highway in Tagaytay.
“Tagaytay is a tourist destination. Some of us who go to Tagaytay travel at 4 a.m. Our hypermarket there carries basic goods—both food and general merchandise. We also have shoppers coming from Laguna, Batangas, because it is open 24/7,” says Periquet.
Gaisano says Metro Retail will open another 24-hour hypermarket in Cebu to serve the needs of foreign and local tourists. He says the growing tourism market is now an important component of the Philippine retail sector.
Metro Retail saw its net profit double to P550 million in the first nine months of 2017, as total sales reached P24.4 billion during the period.
“Our emphasis this year is profitability. That’s why you see our income double for the year. We are after more quality growth than just growth per se. We are being choosy. That explains why our topline did not grow too much this year, because we were segmentizing our market,” he says. “We shifted some of our businesses that are not profitable to become more profitable. Same as banks, you have to be very numbers-driven.”
Gaisano says each Metro Retail store has a different market, ranging from the mass market to high-end market. “What works in Cebu cannot necessarily work in Legaspi City,” he says.
On what distinguishes Metro Retail from other chains, Gaisano says: “Our assortment and the number of products we are offering. We have a lot of direct imports in our stores. That is a deliberate effort on our part to source globally. And you will see the difference in our stores from other stores. We have more outright or direct purchases than competition, if you see the numbers reported,” he says.
“We send our buyers and merchandisers to the US, China, India, Vietnam, Indonesia, Bangladesh and Europe. We are importing a lot,” he says.
“We are very competitive. If you look at one basket, it will more likely be 2 percent to 4 percent lower than the closest competition. We are noted for being price competitive. We do that regularly to check prices. Some people ask why we sell merchandise too cheaply when we can sell higher. But that’s why we are able to build these loyal customers. They love our prices,” says Gaisano.
Gaisano works closely with siblings Margaret, Jack and Edward towards professionalizing the management and ensuring the expansion of Metro Retail. Aside from being the chairman of the retail company, Gaisano sits as chairman of AB Capital and Investment, Pacific Mall Corp. and Vicsal Investment Inc. He is also a director of Vicsal Development Corp., Taft Property, Filipino Fund Inc., Taft Punta Engaño Property Inc. and Direct Model Holdings Inc.
Gaisano’s grandmother, Doña Modesta Gaisano, put up White Gold Department Store, a high-end department store in Cebu in the 1940s. Victor Gaisano, the ninth of 11 children, became an economist and encouraged the family to shift the business strategy from hi-end to mass merchandise.
“After the transformation, the company has become more progressive, the business flourished, because of the shift in target market. That’s where we wanna be—being in mass market in retail,” says Gaisano.
Victor Gaisano received a property in Colon as his share following Doña Modesta’s demise in 1981. Together with his wife Sally, Victor opened the first Metro Gaisano on Colon Street and sold locally manufactured products. The business is now managed by Frank and his three siblings, who started working for the company while they were in school. Frank was the supermarket manager when he was 20.
“When the family reorganized, we developed the business from scratch, back in 1982. When we opened our store, I think we were number seventh or eighth store on the same street at that time. Cebu was considered like Ginza [shopping district in Japan] back then. Even today, there are a lot of department stores along Colon Street. It was very competitive,” he says.
Not even the excessive interest rates during the tumultuous early 1980s discouraged the family from pursuing the retail business. “We lived in that environment. During that time, interest rate was really, really high, with as much as 45 percent. At that time, if you just deposit your money, you get 45 percent from buying Treasury bills with zero risk. Bankers asked why we opened stores when we could just put our money in Treasury bills and earn 45 percent. But my dad [Victor] believed that since our DNA is in retail, we could still survive and we did,” says Frank.
“We believe we could give customers good products, at the right price at the right time. We were able to deliver that when we started,” he says.
Metro Retail opened two other stores in Cebu and expanded to Legaspi City. “Not long after, we opened our Lucena, Market! Market! [2004] and Angeles,” says Gaisano. “Metro Market! Market! is our first store in Metro Manila and our biggest store today, with gross floor area of roughly 45,000 square meters. But we have a couple of stores with about the same profitability,” he says.
Growing profitability encouraged the company to provide livelihood to a depressed community in Bulacan province. “We support that community and we are selling their products also,” says Gaisano.
Periquet says Metro Retail has a corporate social responsibility program with GreenEarth Heritage Foundation, which allows Metro stores to carry GreenEarth’s organic products such as Moringa tea leaves that are grown in its Bulacan farm.
Gaisano says Metro Retail is sticking to its target of doubling the company’s retail footprint, including opening its own convenience store brand. “Ultimately, we will have to go into convenience stores, because of some synergy,” he says.
“We do see that there is still a lot of opportunities for modern retail. Right now, it is probably 50-percent already for modern retail. That means, we can still double at this stage. That is why you see
the acceleration of chains of modern retail. There is still room for growth because the disposable income of Filipinos is increasing,” says Gaisano.
He says the rise of electronic commerce will not substantially affect brick-and-mortar retail in the immediate term. “I think it is still a threat but I it will take time. Even in developed countries, the share of business of e-commerce is a maximum of 6 percent to 7 percent of total retail for the US, Japan and Korea. That’s why you see the reverse. The e commerce players are going to brick and mortar,” says Gaisano.
Gaisano says Metro Retail will focus first on expanding its network locally before looking at other countries. “We are being invited by large companies in the United Arab Emirates to open stores there. But we said there’s still a lot we can do here,” says Gaisano. Roderick T. dela Cruz