Expansion in the Philippines

The Philippine operations of global DIY giants are planning to expand aggressively in the coming year as competition continues to intensify in this Asian market of 96 million people. Ace Philippines, a franchisee of American chain Ace Hardware, plans to open 16 to 21 outlets next year to add to its existing 47 Ace stores while Robinsons Handyman, the franchisee of American firm Do It Best Corp., is looking to open 10 to 15 stores next year to add to its current 60. Ace Philippines is under the SM group, the country's largest retailer. Robinsons Handyman, meanwhile, is operated by the Robinsons group, the country's second largest. "We average five store openings per year, but for 2010, the official count is six branches, with an unofficial count of another 10 branches for Ace," Bernard Paul U Lim, Ace Philippines vice-president for Operations, said. The numbers include the conversion of some Makro stores into SM hypermarkets, which Ace outlets would then anchor. Makro, a global wholesaler, is also controlled by the SM group in the Philippines. The number of store openings could still rise with the company's plan to convert Hardware Workshop outlets - a local brand under Ace Philippines which carries hardware and essential products - into Ace Express outlets, executives said. "Ace is a recognisable brand in the Philippines. In order to bring consumer awareness that the Workshop outlets are part of Ace, we're converting them," said Johnny Cobankiat, founder of The Hardware Workshop Inc., parent company of Ace Philippines. There are currently 30 Workshop stores in the country, with plans to open six more either as Workshop or as Ace Express outlets. Ace Express is the newest Ace format launched in the Philippines. It carries small, impulse products as opposed to construction and big ticket items that are carried by the bigger Ace stores. Besides Ace Philippines and Robinsons Handyman, other hardware brands in the country include True Value and a slew of strong local DIY chains. Ace Philippines executives could not give exact figures for next year's capital outlay, but said that an Ace store costs an average of Php 50 mio (US $ 1.08 mio), including merchandise and fixtures. Meanwhile, Robinsons Handyman is planning to open new stores in "underserved areas," general manager Stanley Co said. Industry players estimate that the Philippine DIY sector accounts for less than 10 per cent of the construction sector, valued at Php 34.37 billion as of the second quarter of 2009. The country's National Statistics Office, meanwhile, estimates the value of home alterations and repairs at Php 3.07 bn for the same period, slipping 0.3 per cent from the Php 3.08 bn registered during the same quarter of 2008. DIY chain executives here have said that the weak global economic climate affected sales in the early part of the year with consumers pushing back home expenses for more basic needs. Back-to-back typhoons that hit the country and claimed lives and property in the second half of the year, however, have spurred revenues as people rebuilt homes that were damaged by floods and rains.