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Sari-sari stores remain a lifeline for Filipinos amidst inflation – Packworks study

Data showed that the month-on-month (MoM) growth in gross merchandise value (GMV) was not correlated with the country’s MoM inflation rate. Instead, it seems to be more driven by occasions, as most of the peaks in the trend recorded coincide with major occasions with long breaks, such as the Christmas season and Holy Week. 

When inflation soars high, sari-sari stores run low, providing a lifeline of essential services to around 94% of Filipinos nationwide.

This is the key finding from the Sari IQ Year-End Report for 2023 released by Packworks, a Filipino startup offering a business-to-business (B2B) FMCG marketplace for sari-sari stores, in its snapshot of the state of the grassroots retail sector in the country.

The report reveals that contrary to expectations, sari-sari store sales trends are not directly driven by inflation. Data showed that the month-on-month (MoM) growth in gross merchandise value (GMV) was not correlated with the country’s MoM inflation rate. Instead, it seems to be more driven by occasions, as most of the peaks in the trend recorded coincide with major occasions with long breaks, such as the Christmas season and Holy Week. 

For instance, despite the MoM inflation rate hitting 6.6% for April 2023, which coincided with Holy Week, sari-sari stores showed resilience, with MoM sales growing by 14.4% – significantly above the inflation rate.

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Andoy Montiel, Packworks’ Chief Data Officer, weighs in on the report finding, “The Philippines’ unique sachet economy plays a pivotal role in the resilience of sari-sari stores amidst the challenges of an inflationary economy. It enables the sale of goods in small, affordable units, ensuring that essential products remain within reach for the average Filipino, even as inflation rates fluctuate.”

In addition, Montiel underscores the significance of the sales increase in sari-sari stores during special occasions, attributing it to their deep cultural roots within their communities and their adaptability in meeting the demands of corresponding observances.

“The stores’ resilience, even amid inflationary pressures, lies in how they are embedded in the fabric of the community’s way of life, reflecting a symbiotic relationship between the stores and their customers. More importantly, it shows how stores display agility in their inventory and operations to cater to the heightened demands of these seasons, further reinforcing their role as indispensable components of community life.”

Meanwhile, the report suggests that sari-sari stores continue to serve as the neighborhood pantry, with key categories recording growth in demand regardless of the occasion. Products with the highest sales include instant noodles (159%), ready-to-heat (221%), recipe mix (117%), and ready-to-cook (42%).

The Sari IQ report also listed down the top products in their network by GMV, which include detergent (Php 690 million), powdered coffee (Php 600 million), shampoo (Php 410 million), canned fish and seafood (Php 350 million), and instant noodles (Php 200 million), which may be considered essential products. This indicates that sari-sari stores are more than just a refuge for relaxation but still serve as the most convenient source of essential goods.

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Moreover, the report also found that sari-sari stores outside of urban areas record the highest sales. Regions with the highest sales are Region IV-A (Php 2.83 billion), Region II (Php 1.82 billion), and Region III (Php 1.58 billion). Meanwhile, traditional urbanized locales in the country, National Capital Region (NCR) and Cebu (Region VII), only place 5th and 6th.

The report’s key findings are based on the extensive data collected through Packworks’ business intelligence tool, Sari IQ. Packworks, with its network of over 270,000 sari-sari stores nationwide, recorded more than 8.2 million transactions and sales of more than 15,000 stock keeping units (SKUs) in 2023.

Sari IQ provides real-time and historical information on consumer expenditures and can be customized to generate evaluations for various product categories sold in compact retail setups. It enables retailers and multinational brands to gain complete visibility into sari-sari stores’ operations, allowing them to extend their slow-moving products and services to a wider pool of customers. Analysis through the platform also helps them develop data-driven decisions to boost sales of sari-sari store owners by understanding and predicting consumer demand within their area.

Founded in 2018, Packworks has been empowering sari-sari stores through its integrated mobile app ecosystem that allows them to digitize their operations, including pricing tools, inventory management, and sales and revenue tracking. Saripreneurs can also access a vital yet affordable inventory financing service to help them grow their businesses. Packworks also promotes financial inclusion for sari-sari stores through its microentrepreneurship program SariSkwela in partnership with social development organization Bayan Academy.

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