Tap P2.9-T low-income mkt, retailers urged
MANILA, The Philippines - The low-income sector of the Philippines, which makes up more than 90% of the country's population, is a largely untapped market with annual earnings of P2.9 trillion, a recent survey revealed.
According to Gary De Ocampo, managing director of TNS, a London-based market intelligence firm, despite their small earnings, the low-income market is “a force to contend with, socially and politically.”
De Ocampo urged retail companies to take advantage of this market by creating products that have good quality and offer value for money.
“The government can encourage poverty alleviation programs that target this population. For companies, this may mean reworking their business models to come up with high-quality products that are affordable. This is difficult but it would be a win-win situation,” said De Ocampo.
According to the Consumer Spending Barometer 2012 survey conducted by TNS, the 90% who belong to the D and E class markets are classified as individuals earning minimum wage or below, and those belonging to single-earning families.
The study, which surveyed 1,500 people from both urban and rural locations nationwide, also showed that Filipinos remain optimistic about their future spending capacity despite having limited savings.
Results showed that around 40% of Filipinos believe their quality of living would improve soon even without sufficient savings, 50% expect their quality of living to remain the same, while only 10% believe their economic well-being will become worse.
Compared to their spending activities, Filipinos are poor savers with only 18% of individuals surveyed aged 18 to 70 claiming to have savings. These individuals mostly belong to economic classes A, B and C with an average of P42,000 in annual savings.
Those living in the greater Manila area have a greater tendency to save. Only 70% of the respondents from this area do not have savings compared to 89% in Visayas, and 80% in Mindanao.
“The results of the TNS Consumer Spending Barometer 2012 show that the general sentiment of Filipinos toward their quality of life is still upbeat despite having a weak culture for saving. This is because Filipino families spread their income to buy both essential and non-essential items,” said De Ocampo.
A Filipino family’s typical budget varies greatly per region and economic class, but is usually spent on food, beverages, home utilities, rent and personal goods. Also usually included in the expenditure are non-essential items like beer and cigarettes. - Rappler.com