SM Investments Corp., the owner of the Philippines’ largest grocery and department store chains, expects Filipino consumers to continue spending more on fashion, health, and beauty products than on essentials like food.
The trend is expected to extend into 2025 , driven by a growing preference for socializing and entertainment, according to Tim Daniels, head of investor relations at SM Investments.
“Two years after the pandemic, people want to go out; they want to meet their friends and clients,” Daniels said. “They seek entertainment and dining experiences, so their retail spending goes toward clothing, health and beauty, and related products.”
In 2024, SM Retail’s revenue from these two non-essential categories saw double-digit growth, with fashion sales rising 10.5% year-on-year and health and beauty products climbing 14.1%. Meanwhile, sales from its food segment increased by 8%.
“What we saw in 2024, particularly in the latter part, was people spending more on fashion, health, and beauty,” Daniels said. “That went hand in hand with what we observed in the malls: a real pickup in food and beverage stores and entertainment.”
Fashion revenue growth peaked at 14% in the fourth quarter, while sales of health and beauty products grew 13% during the same period.
These two segments were the primary drivers behind the 7.8% growth in non-essential sales in the three months through December.
Daniels noted that this momentum helped propel SM Retail’s overall fourth-quarter sales to an 8% increase, the fastest pace in four quarters.
For the full year, SM Retail’s revenue rose 5% to P435 billion, with the food segment contributing P253 billion, while the rest came from department stores and specialty shops focused on non-essentials.
Although the fourth quarter traditionally sees a surge in retail sales due to the holiday season and year-end festivities, Daniels said the performance “sets the tone for the momentum heading into 2025.”
The fourth-quarter growth is a significant story,” Daniels said. “It’s an indicator of consumer confidence and spending behavior in 2025.”
Sales of health and beauty products grew by double digits in every quarter of 2024, while fashion category revenue began accelerating in the second quarter, up from a 5% expansion in the first quarter.
Other non-essential categories, such as kids and home products, also rebounded in the fourth quarter, rising 8% and 9%, respectively, from the previous year.
Record-low unemploymjent and sustained growth in remittances are further supporting consumer demand and spending patterns, said Franklin Gomez, executive vice president of SM Investments.
While full-year consumer spending growth in 2024 lagged behind the 5.5% historical trend, Gomez noted signs of recovery. Household spending picked up in the second half of the year, reflecting an improvement in consumer confidence despite high inflation.
“There is no doubt that consumption in 2024 was affected by inflation,” Gomez said. “But in the fourth quarter, we saw growth in essentials rise to 3%. That’s a good sign. Either people are getting used to higher prices, or it’s the effect of record-low unemployment and continued growth in remittances.”
Fashion and health and beauty were the main drivers behind the 7.8% growth in non-essential sales in the three months through December. Daniels said this helped fuel an 8% increase in SM Retail’s fourth-quarter sales, the fastest in three quarters, pushing full-year retail revenue growth to 5%.
While the fourth quarter accounts for a disproportionate share of retail sales due to the holiday season and year-end festivities, Daniels said, “This sets the tone for momentum heading into 2025.”
“The fourth-quarter growth is a significant story,” Daniels added. “It’s an indicator of consumer confidence and spending behavior in 2025.”**
Sales of health and beauty products grew by double digits in every quarter of 2024, while the fashion category’s revenue growth accelerated to double digits in the second quarter, up from a 5% expansion in the first quarter.
Other non-essential categories, such as kids and home, showed a recovery in the fourth quarter, rising by 8% and 9%, respectively, from the previous year.
Further supporting consumer demand and spending patterns this year are record-low unemployment and sustained growth in remittances, Gomez said.
While full-year consumer spending growth in 2024 lagged behind the 5.5% historical trend, there are signs that consumer confidence is gradually recovering from the impact of high inflation, with household spending growing faster in the second half than in the first, Gomez said.
发表回复