MANILA, Philippines — Major Philippine retailers are scaling back their expansion targets for 2026, as the ongoing crisis in the Middle East drives up fuel costs and forces households to tighten their budgets. According to the Philippine Retailers Association (PRA), the “knee-jerk reaction” of consumers to surging prices in March has led to a noticeable slowdown in foot traffic and discretionary spending.
The shift marks a cautious turn for a sector that had seen a relatively strong performance in the first quarter of the year.
Alice Liu, President of the PRA and CEO of Golden ABC Inc. (the operator of popular brands like Penshoppe, Oxgn, and ForMe), highlighted that the current economic climate is forcing companies to reassess their physical footprint.
- Scaled-Back Targets: Golden ABC has reduced its new store opening goal for the year to 60 locations, down from an initial target of 87.
- Cost Preservation: Retailers are currently focusing on “spaces they don’t want to lose” while holding off on non-essential expansions.
- Operational Tightening: To protect margins, firms are reducing inventory levels and minimizing overhead costs to manage the spillover effects of high oil prices.
The slowdown isn’t limited to apparel and dry goods. The Philippine Franchise Association (PFA) reported a similar cooling in interest.
- Softened Appetite: Steve Benitez, PFA President and CEO of Bo’s Coffee, noted that potential franchisees are becoming more hesitant given the uncertain inflationary environment.
- Travel Trends: The start of April was particularly difficult, as Holy Week travels traditionally draw crowds away from major city malls, further impacting local retail revenue.
Despite the current pessimism, industry leaders believe the deceleration is temporary.
- Fuel Rollbacks: Retailers are pinning their hopes on recent and upcoming diesel rollbacks (expected to hit P12.94/liter this week) to restore consumer confidence and encourage more frequent mall visits.
- Sitting It Out: Liu emphasized that these are interim measures, and the industry is essentially “sitting it out” until global oil markets normalize.
“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 added.
As retailers tighten their belts, consumers may see fewer aggressive store launches but more strategic promotions as brands compete for a smaller pool of discretionary income. Industry analysts suggest that the “selective” approach by major players like Ayala Land and Golden ABC will likely define the retail landscape for the remainder of 2026.
