Richest Filipino Manny Villar enters a growing supermarket business which has just three big players

From 2018 to 2020, AllDay’s sales jumped from P3,045.1 million to P7,931 million, an annual average increase of 61.4%.  Net profit almost quadrupled, growing at a CAGR of 94.9% to P219.6 million in 2020.

For the first six months of 2021, the fast growth was sustained with P4,493.2 million in sales and P179.6 million in net profit. Per year, sales increased 19.7% per year, profits, 58.8%.  AllDay is on track to post P9 billion in annual sales in 2021.

By Antonio S. Lopez

AllDay Marts, Inc. was listed at the stock exchange on Nov. 3, 2021. As soon as the opening bell rang, the stock zoomed upwards to P0.90, 50% higher than its IPO offering price of P0.60.

On Monday (Nov. 8), the stock kept its hefty price, closing at P0.77, giving its stockholders a huge 28% gain in three days of trading, with an upward potential for P1.10 per share price and a possible paper profit of 83%, in just a week.

The supermarket business is booming. This is because the economy runs on household consumption—70% of GDP (value of economic production) or P14 trillion of P20 trillion.  The savings rate is 32% of GDP or P6.4 trillion a year.

The big players

Amazingly, despite such a huge disposable income, there are only very few players in the supermarket business.  It is dominated by Lucio Co’s listed Puregold which has 418 supermarkets. 

The SM supermarket group, including Savemore, is second, with 327 units.

Gokongwei’s Robinsons Supermarket is third, with 264.

 Puregold generates about P110 billion in annual sales.  The SM supermarket group will report about P103 billion in annual sales this year. Robinsons Supermarket makes about P94 billion. 

In sheer numbers, SM is still the biggest retailer, with more than 3,093 retail outlets. The outlets include 76 malls, 59 Hypermarts, 71 Waltermarts, 1,097 Alfamarts, and 1,534 specialty stores.

With a population of 110 million, the Philippines is the world’s 12th largest consumer market.  For its supermarket needs, it seems underserved, with only three major players—Lucio Co’s Puregold, SM, and Gokongwei’s Robinsons Retail.

No wonder the entry of Manuel B. Villar Jr. into the supermarket business has been seamless and extraordinarily well executed.  With just 33 supermarkets, his AllDay Marts is already valued at P17 billion.

Puregold has a market value of P126.86 billion and Robinsons Retail  of P96.85 billion. SM Supermarket is parked under the holding company SM Investments Corp. which has a P1.2 trillion market cap.

According to its IPO prospectus, AllDay Marts, Inc. had 33 supermarkets at the time of its IPO.  The market values each supermarket at P515 million—an extraordinarily high valuation.

AllDay Marts claims

According to its prospectus, AllDay Marts, Inc. is the fastest growing supermarket operator in the Philippines and a leading player in the mid-premium supermarket segment, citing according to GlobalData.

“We provide Filipino consumers an elevated, modern grocery shopping experience with our innovative solutions and dual-format business model,” says the IPO.  It adds:

“We operate an in-store and online integrated modern grocery business offering approximately 3,600 local and international product brands that fall under three key categories, namely fresh items, food items and non-food items. About 30,000 to 40,000 SKUs, including a comprehensive and curated selection of international brands, are maintained to appeal to the increasingly discerning Filipino consumers.”

From its incorporation in December 2016, AllDay Marts has built 33 physical stores as of June 30, 2021, with an aggregate net selling space of approximately 55,881 sqm in 25 cities and municipalities in the Philippines.  The company plans to have 100 stores by 2023.

“We believe that we offer an elevated in-store customer experience through a combination of store aesthetics, comfort, accessibility and convenience. Our stores, as a result, attract a discerning clientele who has a relatively higher buying power and puts a premium on their overall shopping experience,” says the company. 

Digital innovation

Says AllDay Marts:

“Digital innovation is the foundation of our in-store business model. To that end, we are the first to introduce the self- checkout kiosks to improve health and safety protocols and allows our customers to observe social distancing measures in our stores. We have also launched the Personal Shopper Service which allows our customers to simply send their orders through our dedicated hotlines for fulfillment and delivery direct to their homes.”

“To complement our in-store business model, we operate a best-in-class e-commerce platform through www.allday.com.ph which provides a responsive, secure, and fast online shopping experience for our customers. Our e-commerce platform covers our entire store network, utilizing our physical locations in 25 cities and municipalities across the Philippines as last-mile fulfillment centers – thereby expanding the catchment area of each of our stores.”

Dark store concept

“To expand its geographic reach beyond its physical store network, “we recently launched the ‘dark store’ concept (or standalone facilities optimized for e-commerce) that also acts as last-mile fulfillment centers for www.allday.com.ph.”

“Gearing towards the continuation of the growth of our online user base, we recently migrated our current e-commerce platform to a progressive web application (PWA) format which allows for improved functionality and usability for customers who do their shopping either on desktop computers, mobile phones, or tablets.”

Competitive with digital innovations

As a result of these digital innovations, GlobalData considers AllDay to be one of the most innovative supermarket retailers in the Philippines. “These digital innovations have also put us in a leading competitive position,” says AllDay Marts. 

“We intend to further embrace digital innovation along with our core capability of physical store network expansion to actively pursue our vision of becoming the largest platform to drive digitalization of the Philippines’ supermarket retail industry.

As a consumer focused retail company, AllDay caters to a wide consumer spectrum, owing to a combination of pricing, natural location advantages and the nature of the supermarket business.

“We primarily serve and target customers within the upper-middle income to upper income segment, which according to the Philippine Institute for Development Studies (PIDS, Discussion Paper Series No. 2020-22) have an average monthly household income of approximately P76,000 and above,” says AllDay Marts.

Sales and profits

From 2018 to 2020, AllDay’s sales jumped from P3,045.1 million to P7,931 million, an annual average increase of 61.4%.

  Net profit almost quadrupled, growing at a CAGR of 94.9% to P219.6 million in 2020.

For the first six months of 2021, the fast growth was sustained with P4,493.2 million in sales and P179.6 million in net profit.

Sales increased 19.7% per year, while profits, 58.8%.  AllDay is on track to make P9 billion in sales this 2021.

45 stores in 2022, 100 in 2023

AllDay plans 45 stores in 2022 and 100 stores by the end of 2026.

AllDay is a member of the Villar group of companies (the Villar Group), which also includes Vista Land and Lifescapes, Inc. (Vista Land), AllHome Corp. (AllHome), and Golden MV Holdings, Inc. (Golden MV).

Vista Land is one of the largest integrated property developers in the Philippines, providing a range of housing products to customers across all income segments.

Vista Land is also the operator of a network of retail malls and commercial centers in key cities and municipalities in the Philippines, under the brands “Vistamall” and “Starmalls.”

As of June 30, 2021, Vista Land’s portfolio of retail malls and commercial centers included 31 Vistamalls and Starmalls, seven offices and 69 commercial centers.

AllHome is a one-stop retailer for home construction and furnishing with a network of 55 stores nationwide. Golden MV, through its subsidiary, Bria Homes, Inc. is the largest mass market housing developer in the Philippines.

AllDay is a subsidiary of AllValue Holdings Corp., which also owns and operates, through its subsidiaries, AllHome, AllDay RX, Coffee Project, Ruined Project?, Bake My Day, Gastroville, Paluto, Finds, AllDay Convenience Stores, and a number of other food and retail concepts.

Impact of pandemic

With the pandemic, AllDay says the Philippines continues to be challenged as mobility and commercial activity in retail remains limited due to the restrictions and slow roll-out of the vaccination.

With the pandemic, a number of restrictions affected AllDay’s day to day operations.

As an essential business, AllDay did not suspend operations in any of its locations throughout this period of the pandemic. However, due to various levels of community quarantine and curfew in our areas of operation, AllDay’s operating hours decreased from an average of 13 hours pre-pandemic to nine hours.

Throughout the pandemic, AllDay has observed strict safety protocols to ensure shopper safety and health. In addition to compliance with minimum health requirements set forth by the IATF and respective local government units, we utilize staysafe.ph and our own QR Code apparatus for contact tracing.

Temperature checks at every entrance are mandatory, as well as floor markings to ensure customer flow is compliant with social distancing requirements. Total store disinfection is conducted once a month.


AllDay Marts, Inc. was incorporated on Dec. 22, 2016 and operates a chain of supermarkets throughout the Philippines.

As of June 30, 2021, we have 33 stores with an aggregate net selling space of approximately 55,881 sqm across 25 cities and municipalities in the country.

Our product offerings span three key categories, namely fresh items, food items, and non-food items, with approximately 3,600 local and international brands.

Each store carries about 30,000 to 40,000 SKUs including extensive and curated international brands which appeal to our target market. 

We believe that we offer an elevated in-store customer experience through a combination of store aesthetics, comfort, accessibility and convenience.

To complement this in-store experience, we also operate our own e-commerce platform through www.allday.com.ph which provides a responsive, secure, and fast online shopping experience for our customers.

In addition, customers may also do their shopping through our Personal Shopper Service. These on-demand platforms are available throughout our store network, utilizing our physical locations as last-mile fulfillment centers.

As a consumer focused retail company, AllDay caters to a wide consumer spectrum, owing to a combination of pricing, natural location advantages and the nature of the supermarket business.

We primarily serve and target customers within the upper-middle income to upper income segment, which according to a study by the Philippine Institute of Development Studies (PIDS, Discussion Paper Series No. 2020-22), have an average monthly household income of approximately P76,000 and above.

Factors affecting our results of operations

Our results of operations are affected by a variety of factors.

Factors other than those discussed below could also have a significant impact on our results of operations and financial condition in the future.

Philippine macroeconomic conditions and trends

All of our stores are located in the Philippines and, as a result, our operations are significantly affected, and will continue to be significantly affected, by macroeconomic conditions in the Philippines.

Demand for, and prevailing prices of, our products are directly related to the strength of the Philippine economy and consumer confidence, including overall growth levels and the amount of business activity in the Philippines.

Over the past several years, economic growth in the Philippines has led to an increase in personal disposable income, resulting in increased purchasing power and greater demand for consumer products.

We generally target consumers within the “upper-middle income” to “upper income” consumer segments, which includes households with average monthly household income of approximately P76,000 and above, according to the Philippine Institute for Development Studies (PIDS, Discussion Paper Series No. 2020-22).

The Philippines has been one of the fastest-growing economies in Southeast Asia, averaging 6.4% growth per year in 2010-19.

With its growing middle class and expanding young population, combined with reforms and an ambitious infrastructure program (Build, Build, Build), the market has attracted international and local investments.

The COVID-19 pandemic tested the country’s resilience in 2020, impacting most economic sectors.

In Q1 2021, the country’s GDP declined by 4.2% confirming expert’s fears that Philippine economy will recover much slower than expected coming from downturn brought by the pandemic restrictions.

This is the fifth consecutive quarter that the country registered negative growth which makes it the longest recession since the 70s-80s. In Q1 2021, only government expenditure continued to grow.

The biggest contributor Household Expenditure declined. Retailers have felt the impact of quarantine restrictions (Nielsen Q1 2021 Report).

Gross household disposable income has been steadily grown since 2015, along with GDP per capita and real wages, though it fell in 2020 due to the impact of the pandemic.

Gross household disposable income is set to return to above pre-pandemic levels in 2022, rising at a CAGR of 7% between 2025 and 2030 (GlobalData).

As consumers have an increasing amount of disposable income, total retail spend in the Philippines has risen, from P466.1 billion in 2015 to P598.2 billion in 2020, and is set to grow to P1,145 billion in 2030.

Despite this rise, retail will make up a decreasing share of total expenditure, falling from 47.4% in 2015 to 41.8% in 2030, as individuals have more disposable income to spend on other non-essential categories such as leisure, eating out, and holidays.

The government defines the middle class as those earning incomes between two to 12 times the poverty line.

Middle-income households have significantly greater access to education, health, and other services (not necessarily from the government). Most of them live in urban areas, especially in Metro Manila and nearby areas.

The middle class makes up an increasing proportion of the Philippines’ population, rising by 11.7ppts between 2015-20 to 48.9%, and this is forecast to increase to 51.4% in 2030 as the proportion of the lower and working income classes fall.

The Philippines’ consistently strong GDP growth has driven the increasing share of the middle class, and this in turn drives further economic growth as the middle class consumes more, creating more demand for products and services, in turn boosting investments in infrastructure and government services.

Due to COVID-19, the underemployment rate is currently higher than it was pre-pandemic, at an estimated 16-18% in Q1 2021, versus 14.8% in January 2020, and this will have had a disproportionate impact on the middle class, reducing consumers’ disposable income temporarily, but this spend will recover from H2 2021 and into 2022.

The middle class is more willing to pay for better quality goods and services, including on food and groceries, so grocers targeting these consumers should ensure that they have a range of products in terms of price points, including more premium items such as organic produce.

Middle income households are more likely to own amenities like fridges, desktops/ laptops, mobile phones, ovens and cars, and these all affect how these consumers shop and what they purchase.

For instance, they are more likely to buy fresh produce that needs to be kept in a fridge, such as meat and dairy, and will interact with the retailers they purchase from through digital channels including through mobile apps.

According to National Economic and Development Authority, the government targets to graduate to upper middle-income status by 2022. In 2020, median age in the Philippines was at 25.7, one of the youngest in Southeast Asia.

Other contributors affecting the economic growth are the Overseas Filipinos’ (“OFs”) remittances and expanding young population. OFs Remittances in the January to April of 2021 were higher than the level registered in 2019 or before the coronavirus pandemic (BSP, June 15).

Remittances of OFs in January to April 2021 reached $11 billion, 5.1% higher than the $10.49 billion recorded in the same period in 2020 and slightly higher than the $10.8 billion posted in the first four months of 2019.

Growth in cash remittances came largely from the United States, Malaysia, Singapore, and South Korea. The BSP is projecting a 4% growth in remittances in 2021.

Following a slowdown in growth caused by pandemic disruption, the market is forecast to return to more buoyant growth, driven by a growing, increasingly wealthy population.

According to the GlobalData Report, this growth will aid both the wider grocery market (which will expand by CAGR 4.8% between 2020 and 2030) and, in particularly, the supermarket segment (which will expand by CAGR 9.3% between 2020 and 2030).

As mentioned, the country’s robust OFs remittances, expanding middle class, relative young population are key economic drivers. Online groceries also seeing a surge in Southeast Asia. In the Philippines, e-commerce is forecast to grow at 31% in 2025.

COVID-19 global pandemic

COVID-19, an infectious disease that was first reported to have been transmitted to humans in late 2019, has spread globally over the course of 2020, and in March 2020 it was declared as a pandemic by the World Health Organization.

As of June 30, 2021, there had been about 180 million confirmed cases in the world, as reported to the World Health Organization.

The Government has taken measures in varying degrees across the Philippines to contain the spread of the virus, including social distancing measures, community quarantine, suspension of operations of non-essential businesses and travel restrictions.

As of the date of this Prospectus, Metro Manila is under MECQ, while other areas continue to be placed under other levels of community quarantine and there is no assurance that areas that are currently under MECQ, GCQ or MGCQ would not be placed under more stringent community quarantine in the future.

The Philippines continues to be challenged as mobility and commercial activity in retail remains limited due to the restrictions and slow roll-out of the vaccination.

In February 2021, the Philippine government commenced vaccination for those considered as high-risk individuals including healthcare workers, senior citizens, and individuals with comorbidities.

 In June 2021, the government expanded the vaccination drive to all private sector workers required to be physically present at their workplace outside their residences; employees in government agencies and instrumentalities; and informal sector workers and self-employed who may be required to work outside their residences, and those working in private households.

As a result of the COVID-19 pandemic, a number of restrictions affected AllDay’s day to day operations.

As an essential business, AllDay did not suspend operations in any of its locations through the period of the pandemic.

However, due to various levels of community quarantines and curfew in our areas of operation, AllDay’s operating hours decreased from an average of 13 hours pre-pandemic to 9 hours.

Throughout the pandemic, AllDay has observed strict safety protocols to ensure shopper safety and health. In addition to compliance with minimum health requirements set forth by the IATF and respective local government units, we utilize staysafe.ph and our own QR Code apparatus for contact tracing.

Temperature checks at every entrance are mandatory, as well as floor markings to ensure customer flow is compliant with social distancing requirements. Total store disinfection is conducted once a month.

Apart from the direct adverse impact on our business described above, the COVID-19 pandemic has also:

(i) Adversely affected consumer confidence in general macroeconomic conditions and caused decreases in consumer purchasing power and consumer discretionary spending;

(ii) Disrupted the operations of our business partners and third-party suppliers;

(iii) Disrupted the supply chain of materials, facilities and other products through the effects of travel restrictions, quarantines, closure of factories and facilities, and political, social and economic instability;

(iv) Increased volatility or caused disruption of global financial markets and affected businesses’ capabilities of accessing capital markets and other funding resources on favourable or acceptable terms; and

(v) Resulted in social and political instability. As the situation evolves, these indirect impacts may become more significant and could also have a severe adverse impact on the company’s results of operation and cash flow.

The company is not able to accurately predict the impact that COVID-19 will have on its business going forward due to uncertainties with respect to the severity and duration of the COVID-19 pandemic and additional actions that may be taken by governmental authorities, changes in consumer behaviour, recovery of economies and consumer spending, and the competitive environment.

The extent to which the COVID-19 pandemic will continue to impact the company will depend on future developments, including the timeliness and effectiveness of actions taken or not taken to contain and mitigate the effects of COVID-19 both in the Philippines and internationally by governments, central banks, healthcare providers, health system participants, other businesses and individuals, which are highly uncertain and cannot be predicted.

To the extent the COVID-19 pandemic adversely affects the business and financial results of the company, it may also have the effect of heightening many of the other risks described in this Prospectus.

Growth of our operations

We believe that the store network expansion of our single-format, elevated supermarket experience concept is an important factor driving our sales growth and profitability.

During the years ended Dec.  31, 2018, 2019, and 2020 and the six months ended June 30, 2021, we continued to expand our store network.

New stores are accretive to sales and help us to increase our market share by expanding our ability to reach additional consumers.

As we have expanded from 17 stores as of Dec. 31, 2018 to 29 stores as of Dec. 31, 2020, our sales have increased from P3,045.1 million for the year ended Dec. 31, 2018 to P7,931.0 million for the year ended Dec. 31, 2020. 

The increase in the scale of our operations has provided us with greater purchasing power with suppliers which, in turn, has increased our product offerings for our customers and improved our profitability.

We believe that we will develop even greater purchasing power from increased store density that will enable us to continue to obtain favorable purchasing terms from our suppliers.

Such purchasing terms will enable us to improve our gross margins while continuing to offer customers a wide assortment of products at competitive prices.

Our sales and profitability are also driven by our ability to successfully grow sales and increase productivity at our existing stores, and our ability to maintain and improve our product mix.

Our stores are strategically located in prime shopping districts and densely populated areas, allowing us to efficiently maximize our exposure and reach our target customers.

Most of our stores are located in Mega Manila, but we are also starting to branch out to other provinces where there is potential growth in the country’s disposable income.

As of June 30, 2021, we had a portfolio of 33 stores nationwide, with 24 stores in Mega Manila, six in Luzon (outside Mega Manila), and three in Visayas, with an aggregate net selling space of approximately 55,881 sqm. We plan to continue to increase our number of stores in 2021 to up to 36 stores.

Our ability to secure retail locations will continue to affect our business, financial conditions and results of operations. Our expansion is affected by the business plan and investments of the Villar Group, including Vista Land, as these plans and investments factor into our determination of suitable sites for new stores.

Our ability to effectively manage costs and expenses

We operate in a volume-driven industry and must carefully control our costs. We believe that we must continually sell high volumes of our products to generate significant profits. Controlling our costs of merchandise sold and operating expenses is key to maintaining our margins.

We seek to control these costs by, among other things, leveraging our scale and long- term relationships with suppliers, consolidating our warehouses and operating our own distribution centers and clustering our stores around such distribution centers.

We have one central distribution center located in Muntinlupa with plans to add satellite distribution centers and buffer stock at each store’s warehouse.

Where possible, we seek to pass on merchandise price increases to our customers. We are also focused on improving our margins by seeking volume discounts, advertising and marketing support, and premium placements.

 Suppliers typically provide in-store merchandisers to promote their products, thus providing additional headcount. We have taken measures to control and manage operating expenses, particularly rental expenses and labor costs.

We seek to manage our rental expenses by leveraging our relationship with the Villar Group, which includes Vista Land to negotiate, on an arm’s length basis, favorable rental rates and leasing terms, which is currently a sales-percentage-based rent.

We also seek to maximize our effective rental cost per square meter of selling space by adopting a well-planned and efficient store design.

Controlling expenses

We take measures to control our labor costs with improved worker productivity through cross-training of personnel to enable them to handle multiple areas of operation, staff scheduling that takes into consideration variances in store traffic during hours of operation and monitoring of attendance and timeliness of staff reporting, and manage headcount to avoid overstaffing, as well as leverage our scale with suppliers to obtain in-store merchandisers.

As a result of our cost control measures, our Cost of Merchandise Sold, as a percentage of Sales, has remained relatively stable at 81.1% in 2018, 80.6% in 2019, 2020, and for the six months ended June 30, 2021.

Other Operating Expenses, as a percentage of Sales, has steadily decreased to 17.7%, 17.0%, and 15.2% in 2018, 2019, and 2020 and 14.9% for the six months ended June 30, 2021, respectively.

Competition

The retail industry in the Philippines is very competitive. We compete with various retail outlets selling merchandise falling under the same product categories that we offer based on factors such as price, store location, product assortment, availability and quality, customer service, customer shopping experience, attractiveness of our stores and presentation of merchandise and brand recognition, or a combination of these factors.

Moreover, we anticipate competition from new market entrants and joint partnerships between national and international operators in certain product categories.

Intense competitive pressures, including those arising from our expansion strategy or our inability to adapt effectively and quickly to a changing competitive landscape could affect our prices, our margins or demand for our products and services.

Changes in customer tastes and preferences

Consumer demand for our products is significantly affected by consumer preferences. Our success depends in part on our ability to identify social, style and other trends that affect customer preferences, and to source and sell products that both meet our standards for quality and respond to changing customers’ preferences.

The rapid availability of new products and changes in consumer preferences have made it more difficult to reliably predict sales demand.

We rely on experience, data and established processes to accurately forecast and manage fluctuations in demand. These processes include conducting internal and customer surveys, reviewing industry reports, attending trade shows and industry benchmarking to assess changes in consumer preferences.

Failure to source and effectively market products, or to accurately forecast changes in customer preferences, could negatively affect our customer satisfaction levels, our relationship with our customers and demand for our products and services.

In addition, we may be affected negatively by changes in the consumer preferences relating to the method of shopping, for example, through online or home shopping.

In the event that we are unable to identify and adapt to such changes in consumer preferences quickly or the products which we currently carry are superseded by merchandise carried by our competitors (including online competitors), consumer demand for our products may decline and our business, financial condition, results of operations and prospects may be materially and adversely affected.

Online shopping

Part of our efforts to address this shift in consumer behavior is the launch of our online shopping platform www.allday.com.ph. To supplement this effort, we are also actively engaging with the country’s leading on-demand services and e-commerce aggregators to ensure that AllDay is well-represented in terms of selling presence and brand awareness.

With competition in the e-commerce landscape also ramping up, we also introduced differentiators to our own e-commerce capability through our Personal Shopper Service and 24/7 delivery. Implementing these allow us to keep abreast of shifting consumer behavior with a differentiated e-commerce experience.

 In addition, we also maintain an internal market research group, engagements with data providers such as Nielsen, as well as a continuous dialogue with our suppliers on customer preferences to inform management strategy.