By Brian James Lu

Sari-sari stores important for economic growth

February 24, 2024, 9:08 am

A study states that sari-sari stores in the Philippines had a sale of PHP8 billion in 2023. This is a large sum considering that sari-sari stores thrive all over the country – in every nook and cranny. What is surprising is that the sale in 2023 represents an increase of 20 percent from the previous year. This only shows that communities are recovering from a slump caused by the pandemic.

This data on Philippine sari-sari stores is the result of a study by Packworks that tracked information from more than 200,000 sari-sari stores in the country. Packworks went on to state in its study that there were 8.2 million transactions in sari-sari stores in 2023.

Sari-sari stores are endemic to the Philippines. It is the lifeblood of urban and rural communities. Their ubiquitous presence represents not only economic and social importance but cultural importance, as well. Sari-sari stores are important facets of the community where the trade of basic needs is sold at the smallest retail quantity. Perhaps it is only in the Philippines that one can buy a cigarette, candy, shampoo, soap, and many other basic commodities. There was even a time when one could buy vinegar, cooking oil, and soy sauce at what we call “tingi.” Many sari-sari stores today have added vegetables and meat to their products, cornering a sizeable consumer base. Why would someone go to the market and spend on a tricycle fare when these are already available in sari-sari stores?

According to the Asian Preparedness Partnership, there are about 1.3 million sari-sari stores in the Philippines, meaning a lot of Filipinos are relying on these small stores for a living. There are sari-sari stores run by families and others with paid employees (often below the minimum wage standard). Sari-sari stores are often operated by women, perhaps to cope with finding a source of income. Sari-sari store owners are categorized in the labor force as self-employed. Self-employed are “persons engaged in business and who derive their personal income from such business.”

I am proud of the entrepreneurial spirit of Filipinos. Sari-sari stores are nanopreneurs who want to survive with their families. Since they are economically small, they are not bankable; hence, they borrow from informal lenders at usurious rates. Often, these are the so-called “Bombay” or "5-6,” the payment amortization of which is paid at a daily rate.

Many nanopreneurs belong to the underground economy. The Philippine Institute for Development Studies (PIDS) defines the underground economy as the “diversified set of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state.” In fact, sari-sari stores with paid employees do not have social benefits, such as the Social Security System (SSS), PhilHealth, and Pag-IBIG. A “kasambahay” is more fortunate since she or he is accorded a minimum wage by law and enjoys social benefits.

Rural communities are largely dependent on sari-sari stores rather than the large groceries that are found in municipal centers. The retail mentality of Filipinos, largely due to a lack of economic opportunities, is the reason for the proliferation of sari-sari stores. It is no wonder that competition among them is firm in terms of urban and rural opportunities, as they exist near each other. They must cope with customers who seek the cheapest price possible for desired goods.

Sari-sari stores also have a credit system for their “suki.” In fact, this has become the norm in communities and oftentimes may lead to a store’s bankruptcy. Most store owners often provide credit to "suki,” who regularly pay during payday. This system builds trust and loyalty between the owner and the consumers in the community.

In rural areas where sari-sari stores have enough space, these have become a community hub where neighbors meet, chat, and exchange information. I find this part of our community culture since, even with the advent of social media, people still have a venue to meet and exchange pleasantries.

Packworks studies of sari-sari stores reveal that 70 percent of manufactured goods are transacted in these stores. The special place of sari-sari stores among neighbors has made them persist throughout the decades. The increasing sales of sari-sari stores attest to their importance in commerce and participation in economic growth in communities and the nation.

Given the pioneering study of Packworks on sari-sari stores, I hope the government can come up with programs to assist them. Last year, the national government provided PHP15,000 each for sari-sari stores that are also rice retailers to cushion the impacts of the rice price cap. Thousands of such stores all over the country benefited from the livelihood cash aid.

But it should not stop there. Perhaps the national and local government units can come up with a comprehensive program given their contribution to communities and the economy.

The Quezon City government has already pioneered a vendor business school. Sari-sari store owners have all the right to assistance, given their informal setup since they are in the owner’s home and managed mostly by the mother.

Interestingly, the Quezon City government has included in its Pangkabuhayang QC program a startup capital of PHP20,000 for sari-sari stores. It has allotted an annual budget of PHP200 million for this program, with 20,000 aspiring entrepreneurs expected to benefit from it every year. To ensure the success of the program, the Quezon City government partners with various government agencies, civil society organizations, and the private sector to provide technical assistance to those qualified.

This holistic approach to spurring economic activity in Quezon City communities mirrors the commitment of Mayor Joy Belmonte to people-centric governance that is inclusive and responsive to the needs of its QCitizens. I still recall what the good mayor had said: “We have upgraded our mode of governance from being merely consultative into a fully inclusive, integrated, and participative process of decision-making.”

Editor’s note: The opinions expressed in the foregoing article are solely the author’s and do not reflect the opinions and beliefs of the Philippine News Agency (PNA) or any other office under the Presidential Communications Office.


About the Columnist

Image of Brian James Lu

BRIAN JAMES J. LU, MMgt, is an entrepreneur, business adviser, government consultant, and is deeply involve in civil society organizations. He advocates good governance, ethical business practices, and social responsibilities. He is the President of the National Economic Protectionism Association (NEPA) and Chairman of the Foundation for National Development (Fonad). His broad experiences in the private and public sectors give him a unique perspective to advance his advocacies.