Competition Is Stiff
With all those existing and emerging cheap brands of clothing, Robinsons Retail seems to be struggling to compete when it comes to the fashion business. The clothing industry’s competition is so stiff that it’s making Robinsons Retail to consider exiting the fashion business focus more on its segments with higher profits. Compared to cheaper, faster fashion chains like Uniqlo of Fast Retailing Co., Topshop and Dorothy Perkin of the retail giant continue to go down. So, is it time for Robinsons to retire from the fashion industry? Let’s take a look at some of the major key point to consider.
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Other Products To Consider
Since clothing is becoming out of the line for Robinsons Retail, the firm sees the rise of pet, health and beauty products. These are the top three other products to consider if they are to retire from the fashion business. Gokongwei noted that the pet world is getting big, dogs are becoming more and more spoiled and people are continuously spending money on their pets. The money is in food, hardware, drugstores, beauty products, and pet products so the company is rethinking to put their money in these business lines instead. The fact that local and cheaper fashion brands are entering the market, this makes Robinsons’ fashion segment shrink. As of this writing, the company is already reducing the number of its fashion stores.
Dwindling Operating Margins
Robinsons Retail has dwindling operating margins and increasing low-cost space competition. One of the major reasons why the firm experiences a shrink is, of course, its fashion business that is being outperformed by cheap clothing brands. Now, the retail giant is focusing more on higher-spending consumers by expanding its premium grocery market and franchising more foreign beauty and pet stores. The firm expects to grow its revenue 15% every year for the next 5 years of operation. Robinsons Retail has six brands and 40 stores at its fashion portfolio by the end of 2018, which were cut down from nine brands and 60 stores in 2014.
Robinson’s Retail Capital Expenditure
The retail giant is to position its capital in a way that gives more growth to the firm. Speaking of pet and beauty products, Robinsons Retail has acquired personal care and beauty stores like Arvoca and Club Clio from South Korea. This is in addition to 15 stand-alone stores that sell Benefit Cosmetics, Shiseido, and Elizabeth Arden. The firm was also able to get a license for Pet Lovers Center from Singapore and plans to open its second brand this 2019. The firm will spend about P3 billion to P5 billion in order to achieve its plan to add 100 to 150 more stores annually, which will support its target to increase mid-to-high teen revenue growth within 5 years. Currently, it has 1,911 stores nationwide and another 1,960 branches of Generics Pharmacy.
