On the 10th of January 2010, Pinoy Supermarket, a wholly Filipino owned firm, had successfully opened its door to the Filipino British Community as the newest and latest addition of Filipino store in London. Its address is at 10 Hogarth Road,-a minute walk from Earls Court tube station and bus stop.
Pinoy supermarket is located in a traditionally and predominantly Filipino high street at Earls Court Road. Filipino business establishments in the area include two Filipino banks, namely: the Philippine National Bank (PNB) and Bank of the Philippine Islands (BPI); five money transfer service provider; four Filipino supermarkets; two Filipino restaurants; and several other businesses in travel and personal care. Most of the Filipinos from London and the countryside often converge at Earl?s Court Road to avail themselves with the services offered in the area. And since this place is also known as the ?Manila? of the Filipino British Community every Filipino business enterprise prefers to open shop within the vicinity of Earls Court Road.
Prior to the acquisition of the premises of Farochelin Group of Companies last year, the current location of Pinoy Supermarket is previously occupied by a subsidiary of Farochilen, registered as Tatak Filipino and other Oriental Foods, Ltd. It is one of the oldest Filipino Supermarket in Earls Court Road established in late 1980?s. Most of the Filipino customers thought during their recent visit to the store that it is still part of Farochilen and appreciates the modern designs of the store, and feel surprise when informed that the store is under new ownership.
Pinoy supermarket primarily sells Filipino FOOD products and non-alcoholic drinks such as rice in whole or flour; raw and ready-to-eat noodles; sardines and other canned foods; powder and liquid seasonings; frozen fish, pork and beef meat, processed meat and sausages; sweetened and preserved fruits in bottle or can; beverages in can, bottle or pouch; milk and powdered drinking chocolate; and other oriental goods.MARKET
The Primary Target Market (PTM) of Pinoy Supermarket is the Filipino immigrants in the UK. The demographics of its PTM cover all levels of each variable, namely: from baby to pensioner; irregular to high earning professionals and businessman; tourists, temporary and resident or Filipino British; Londoners and countryside; and of different religious affiliation. There is no emphasis on psychographics and behavioural segmentation.
The Secondary Target Market of Pinoy Supermarket is the Orientals or Asia-pacific immigrants, such as: Thais, Malaysians, Indonesians, Chinese, Japanese and Koreans.
Information regarding the EXACT market size of Filipino immigrants in the United Kingdom, specifically in London, is not available at the moment due to lack of database and market research. The number of retail stores owned by Filipinos in the UK is small and most often still employ manual data processing and less reliance on any enterprise software due to the high cost involve. Hence, there is a need to obtain an estimate of the total market potential of Filipino products, which are sold by Filipino retailers, from statistical reports and derive a conservative figure after reckoning several assumptions. However, this is entirely an estimate to simplify the analysis with the information at hand. The following are the basis for the assumptions employed:
- Income- According to the UK Government, National Statistics Office (NSO), the average annual Gross Disposable Household Income (GDHI) per head in the UK is ?14,317 as of 2007. This is shown in Table 1A in the annex section. Most Filipinos who were working in the UK, particularly those who were employed on Medical and Health services, has income level almost twice as much as GDHI. In order to simplify the calculation, the published April 2009 GDHI of 2007 is used as the average income per head.
- Expenditure- Base on the Family Expenditure Survey (FES) from NSO, the FOOD AND NON-ALCOHOLIC expenses as of 2008 is 16% of the total expenditure. This is shown in Table 4.2 in the annex section. The computation of expenditure is equal to the GDHI since most Filipinos in the UK tend to spend the remaining income after making a remittance or money transfer to their families in the Philippines.
- Population- As of 2007, the total number of Filipinos in the United Kingdom is 203,035. Table 30 in the annex section presents this data. An assumption of 10:2 ratio or 80 percent of the total Filipino UK population is economically active or having an employment. Most of the Filipinos in the UK have either resident or temporary with work permit or undocumented, and of working age. Both Parents of a Filipino family are also employed either one is working full or part-time.
The table below shows the ESTIMATED MARKET SIZE of Filipino retailers in the UK as calculated using the assumptions.
For Pinoy Supermarket, this ?372 million worth of Market is a ?gold mine?. There is a huge potential for growth in its market, which is Filipino immigrant, since it barely share less than a fifth of 1% or 0.2% of the entire market, base on its current sales.
Most Filipinos buy their groceries from major supermarkets such as Tesco, Sainsbury and ASDA, and usually, they only buy for Filipino goods when they miss and crave Filipino delicacies.BRAND POSITIONING
It is vital for Pinoy Supermarket to differentiate itself from the competition. It has already classified its market niche which is the Filipino immigrant in the UK. However, there are a number of Filipino store offering the same Filipino products and competitive pricing policy. It must therefore define its unique selling proposition.
The Unique Selling Proposition (USP) of Pinoy Supermarket is being a ?One Stop Shop? for Filipino customers.
The Main Indicators for Differentiation are:
- The range of product lines of Filipino Products. It must have all the known Filipino products in the Philippines. In the event that some products do not conform to the UK food and safety standards, it should provide Filipino manufacturers the necessary information to meet the UK specifications.
- The range of product lines offered by UK Supermarkets. There is no need for Filipino customers to buy their groceries from leading UK supermarket if Pinoy Supermarket can also sell all the products they need at competitive price. They can have all their groceries, -both Filipino and local products at Pinoy Supermarket without having to go somewhere else.
- Store Location. The convenience in terms of accessibility of the store is also important since the proximity of store to the Filipino customer?s residence, plays an important role in their buying patterns. Hence, there is a need to open or acquire stores near the high streets and town centres where huge numbers of Filipinos often do their shopping after work or at weekends.
- Allied Services in Money Transfer and Cargo Forwarding. The most important activity for Filipinos is sending their hard earned money and UK goods, as presents or gift in bulk, to their families in the Philippines. Pinoy Supermarket has a sister company, called DIRECT MONEY TRANSFER (DMT) situated inside its store at the basement level. DMT offers services such as money transfer, pension payments, and as an authorized agent of Western Union. Majority of Pinoy Supermarket customers are clients of its sister company the DMT. There is another company which is being planned to open this year and will have its office in one of the store premises. The new firm will offer cargo forwarding in boxes of varying dimensions to be sent right at the home of recipient in the Philippines.
Pinoy supermarket has three other competitors near its location, one just across the street and two others on Kenway Road. To further emphasize the importance of Pinoy Supermarket?s USP as a key factor of its success, a chart below tracts its current position and its competition.
The data reveals that Pinoy Supermarket has not totally differentiated itself from Tindahang Pinoy. Both stores sells and offers the same products and services to Filipino customers. This indicates the importance of realigning Pinoy Supermarket?s strategic priorities towards the fulfilment of its USP at the soonest possible time.
Pinoy Supermarket has other indirect competitors in the area such as off-licence stores and leading supermarkets such as TESCO and Sainsbury. These stores do not sell any Filipino products but has significant impact on the sales of Pinoy Supermarket if Filipino customers buy most of their goods from the said stores and have less money left to spend for Filipino products.
The owners of Pinoy Supermarket have decades of experience in operating a supermarket providing Philippine products to Filipino customers overseas. Their level of knowledge and skills is high and reckoned as expert on this field by their counterparts. They have a store in Riyadh, Saudi Arabia, where they were themselves once Overseas Filipino Worker (OFW). The sister store of Pinoy Supermarket in Riyadh had already been operating for decades.
The Store in Riyadh has an importation business due to the unavailability of local supplier and supported by the money transfer and cargo forwarding business. Pinoy Supermarket has this competitive edge by simply following the business model of its sister store in Riyadh.
Presently, Pinoy Supermarket is supported by its sister company, the Direct Money Transfer Ltd. (DMT). The presence of DMT inside the store had help Pinoy Supermarket increase its sales by two folds in recent weeks and continually break previous sales records.
In terms of display area, Pinoy supermarket has twice the square foot area than its competitors. It can accommodate twice the number of product lines currently held by other Filipino stores. And, it has four huge coolers and three mid size freezers. Its competitors have only an average of two coolers and freezers.
Filipino customers are also impress by the spacious, modern and organize design of the store. They can spend more time selecting the products they consider to buy and not to worry about being push around in a queue since the store has enough space to accommodate every customer. With every product given a good display, this visual effect will eventually translate into sales.
There are CCTV cameras on every corner of the store giving a full view to every activities occurring within the store. These CCTV cameras at Pinoy Supermarket will serves as deterrents to any potential security risks and thief issues. This security system can be remotely monitored even overseas.Weaknesses
As a new player, the market share of Pinoy Supermarket is small in comparison to its competitors. It needs an effective strategic plan in all its business operations in order to constantly and gradually gain some significant portion of its market.
The huge area of Pinoy Supermarket entails more staff is needed to deal with merchandising compared to just almost a standalone operation on other stores. This means an additional cost to the stores daily operations. And since it has two levels, - the ground floor and basement, customers sometimes finds it uncomfortable to use the stairs just to buy a few things they need.
The products and services offered by Pinoy Supermarket did not differentiate itself from its competition. The customers could hardly distinguish it from Tindahang Pinoy and had perceived some of its products line slightly expensive than the rest of Filipino stores.Opportunities
With an estimated ?397 million worth of Market, there is huge revenue potential if Pinoy Supermarket can also offer products sold by major supermarket at competitive price since instead of just making sales out of Filipino goods they can also capture the Filipino market currently patronizing UK stores. Why would Filipino customers go to local supermarkets if they can have it all with a Filipino store?
The core business is on Filipino products and in order to support and increase sales, products offered by local supermarkets must also be provided at competitive price. By simply providing a range of affordable and cheapest product for every product line offered by leading supermarkets, Filipino customers will opt to buy all their goods at Pinoy Supermarket.
There is also a need to localize the product line of the store, if for example the store is near a busy area such as a tube station, the store may opt to apply for an off license in order to add sales. About 20% of customers who walk in the stores where other nationalities and usually just left because they were looking for products which the store does not have, but are generally available to all local stores.Threats
The nearby Manila Supermarket had started engaging in a so called price reduction scheme in order to keep existing customer from switching to Pinoy Supermarket. One customer loyal to them had been over heard by one of the staff of the new store chanting ?ours is cheaper than yours", (?Mas mura kami?). This is a real challenge to the new store since the real intention of the price reduction scheme is not really to increase sales but to gain an advantage over the competition through communicating a message to the current and potential customers the idea of ?better value for money? as a positioning-, which is supposed to be one of the elements for the brand positioning of Pinoy Supermarket.
Due to the proximity of Manila Supermarket to Pinoy Supermarket, most customers had developed a habit of buying some products from one store and the rest with Pinoy Supermarket. This trend is really alarming since it entails a loss of sales on the part of Pinoy Supermarket. A deeper analysis will reveal that this is basically due to a perceive price variance from both stores. The customers had made a list in their mind which products are most likely cheaper from each store. Hence, there is a loss on sales for Pinoy Supermarket even if the difference seen by the customers in prices is merely a matter of perception.
Shall Pinoy Supermarket engage in a price war? If Pinoy Supermarket will provoke or respond to price competition, it will certainly erode a significant portion of its profits and in the long run will deteriorate its finances. It is far more effective to focus on increasing the volume of sales per purchase per customer. Pinoy Supermarket can provide discounts if products were bought in pairs, bundles or groups. It can even have a promotional tie up with DMT. An accumulated amount of purchase of ?500 from Pinoy Supermarket will entitle a customer for a voucher of ?5 money transfer charge, which is the minimum charge for a single remittance transaction of less than a thousand pounds. Instead of involving in a price war, Pinoy Supermarket can just simply allocate a budget for sales promotion program. These can be implemented as long as it is financially viable.
The most important factor to be developed by Pinoy Supermarket at this early stage of its business phase is to build a loyal customer base. These loyal customers will serves as champions and reckon Pinoy Supermarket as one of their own. On their own way, they promote and defend Pinoy Supermarket without being compelled nor paid. The best way to develop these loyal customers is to establish a good and lasting relationship with customers in every aspect of the stores transaction with them. The Filipino has its own term for this known as ?SUKI?- loyal customer.
There is an upcoming general election by the middle of this year. In the event that the Labour party losses the majority seat in the House of Commons in favour of the conservative, the long years of pro-immigration policy of United Kingdom will come to an end. The conservatives had been known in building tough barriers in the entry of immigrants and even had maintained a critical stance towards European Union. This would mean a steady NET decline in the number of Filipino immigrants in the UK, particularly those with temporary permit to stay, which comprises half of the total population. This translates to a steady reduction of the market size of Filipino immigrants for Filipino retailers like Pinoy Supermarket.
The recent financial crisis reckoned as the worst since the deep depression in 1929 has less effect on Filipino immigrants except for students, since majority of them work in medical and health services, hotel and restaurants, and affluent household. And they had been very resilient since most Filipino has at least two to three jobs in a week. The resiliency of Filipino immigrants provides security to the sales of Filipino retailers especially Pinoy Supermarket.Social
Filipinos are very adaptive to any culture. They can blend in well and adjust to social requirements in the environment they are in. Thus, the cultural diversity of London will have no significant effects on the way of life of most Filipinos in the UK. They will still continue to patronize Filipino products.Technological
The availability of enterprise hardware and software in the market will provide an opportunity for Filipino retailers to achieve a good profit margin through proper control of their inventory. Hence, the investment made by Pinoy Supermarket on one of the point of sale system will help it speed up processing customer purchases and automate its information system. This entails good customer service and efficiency in its operation, which translates to sales and profitability.Environment
Reduction of carbon footprint is one of the highly emphasize issues regarding climate change. It is apparently an issue of conserving energy and water usage on the part of business establishment since an increase in the usage of fuel, electricity and water, also increases directly or indirectly carbon emissions. Apparently, Pinoy Supermarket does it share by reducing the use of electricity which is one of the biggest variable cost in its operation.Legal
There are restrictions as to the kind of products a store can sell. The current business set-up of Pinoy Supermarket is limited to Food and non-alcoholic beverages. It means it cannot sell Filipino beers and hard liquors such as San Miguel Beer and Tanduay, which are known ?Cash Cow? brands in the Philippines. It can neither sell cigarettes like Champion and Hope, originating from the Philippines. These brands of products had been sought after by Filipinos in the UK.
It is not also possible to sell all known brands from the Philippines since some of the product failed to meet EU and UK specifications. Thus, Pinoy Supermarket can only sell Filipino products which had been duly approved for sale in the UK.
Pinoy Supermarket is the newest Filipino store selling a wide range of Filipino products in London, United Kingdom. Its market niche is Filipino immigrants who were either permanent resident, temporary or undocumented and most are economically active or employed. However, there is a need for Pinoy Supermarket to position itself for growth since it has only less than 1% share of the estimated market size of ?397 million pounds.
Its unique selling proposition of being ?a one stop shop? for Filipino customers will effectively differentiate itself from the competition. By carrying a wide range of Filipino and local products, and offering of services in money transfer and cargo forwarding under one roof, it will enable it to attract and retain Filipino customers and gradually capture more market share.
Customer loyalty should be one of the key factors for success indicators to be developed by Pinoy Supermarket since at some point in time other Filipino retailers will challenge its core business competence with added variations. At the height of the competition, Pinoy Supermarket can out manoeuvre its rivals primarily because of its huge loyal customer base.