The country’s retail sector is already feeling the impact of the Middle East conflict as consumers continue to tighten their budgets and cut back on spending, the Philippine Retailers Association said.
PRA president Alice Liu said most retailers experienced weaker traffic in the first half of April, reflecting consumers’ ‘knee-jerk reaction’ to high fuel prices and broader market uncertainty.
‘They (consumers) look for ways to save. When people are uncertain, the tendency is they hold back on spending until they have more clarity,’ Liu said in an interview, noting that the Holy Week break in early April also weighed on retail activity.
Liu is the president and CEO of Golden ABC Inc. (GABC), the company behind popular fashion brands Penshoppe, Oxygen, Regatta, Memo, ForMe and Bocu.
As geopolitical tensions persist for nearly two months, Liu said businesses have taken a wait-and-see approach while preparing contingency measures in case the conflict drags on.
‘I think retailers who are smart are also trying to ensure that they prepare their inventory, that they reduce it so that you don’t have too much stuff. You minimize your overhead,’ she stressed.
For PRA chairman and Toby’s Sports founder Roberto Claudio Sr., the ‘worst international crisis’ has also prompted heightened caution among retailers and consumers.
Against this backdrop, Claudio expects retailers to scale back their expansion plans this year.
For Toby’s Sports and GABC in particular, both companies have trimmed their planned store openings amid ongoing uncertainty.
‘It (expansion) is dependent on consumer confidence. We have plans for bigger numbers of store openings, but consumer appetite is reduced simply because of fear,’ Claudio said.
Despite recent rollbacks, domestic fuel prices remain elevated, continuing to ripple across fuel-dependent industries such as transportation, agriculture and energy.
This has led businesses to absorb significantly higher operating costs and, in some cases, raise prices.
‘The cost is primarily driven by the fuel prices,’ said Steve Benitez, president of the Philippine Franchise Association.
Benitez, also chairman and CEO of Filipino coffee chain Bo’s Coffee, said businesses are putting measures in place to cushion the impact of the crisis, including reducing operating hours.