MANILA, Philippines — Rising fuel costs triggered by the ongoing turmoil in the Middle East are forcing Philippine retailers to scale back expansion plans as households tighten their belts, industry officials said.
Alice Liu, president of the Philippine Retailers Association and CEO of Golden ABC Inc., which operates clothing brands Penshoppe, Oxgn, and ForMe, said that while most retailers enjoyed a strong first quarter, consumer spending pulled back sharply after oil prices surged in March.
"When the crisis started, the knee-jerk reaction of consumers was that they would really cut back on spending," Liu said in an interview. "Retailers are all feeling that now."
Golden ABC has already trimmed its store-opening target for the year from 87 to approximately 60 locations as the company evaluates which spaces are essential. Retailers are also reducing inventory levels and cutting overhead costs to manage the spillover.
"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," Liu added.
April has been especially challenging, as the first week coincided with Holy Week, when mall foot traffic typically drops due to travel. The franchise sector is also feeling the pinch. Steve Benitez, president of the Philippine Franchise Association and CEO of Bo's Coffee, noted a softening appetite among franchisees.
Despite the gloom, 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."