Rising inflation has not affected sales trends in “sari-sari” stores, variety shops found on almost every neighbourhood street in the Philippines, providing a lifeline of essential products and services to around 94% of Filipinos nationwide, a new report finds.

These retail outlets, which sell a wide range of household items from shampoo and cooking oil to prepaid “loads” for making mobile text messages and calls, continue to thrive in the country’s “sachet economy”, in which members of low-income communities prefer to buy consumer products such as toothpaste, detergents and beverages in single-use plastic bags.

Month-on-month (MoM) growth in the stores’ gross merchandise value is not correlated with the country’s inflation rate, according to the latest Sari IQ report by Packworks, a Philippine-based start-up offering a business-to-business (B2B) marketplace of fast-moving consumer goods (FMCG) for sari-sari stores.

Instead, it seems to be driven more by occasions, as most of the peaks in the trend recorded coincide with major holidays with long breaks, such as the Christmas season and the Holy Week.

For instance, despite the MoM inflation rate hitting 6.6% in April 2023, which coincided with the Holy Week, sari-sari stores’ sales for the month grew by 14.4% – significantly above the inflation rate.

"The Philippines’ unique sachet economy plays a pivotal role in the resilience of sari-sari stores amidst the challenges of an inflationary economy. It enables the sale of goods in small, affordable units, ensuring that essential products remain within reach for the average Filipino, even as inflation rates fluctuate,” says Andoy Montiel, Packworks’ chief data officer.

Symbiotic relationship

Montiel also underscores the significance of the sales increase in sari-sari stores during special occasions, attributing it to their deep cultural roots within their communities and their adaptability in meeting the demands of corresponding observances.

"The stores’ resilience, even amid inflationary pressures, lies in how they are embedded in the fabric of the community's way of life, reflecting a symbiotic relationship between the stores and their customers,” he explains. “More importantly, it shows how stores display agility in their inventory and operations to cater to the heightened demands of these seasons, further reinforcing their role as indispensable components of community life."

The report suggests that sari-sari stores continue to serve as the neighbourhood pantry, with key categories recording growth in demand regardless of the occasion. Products with the highest sales include instant noodles (159%), ready-to-heat food items (221%), recipe mix (117%), and ready-to-cook products (42%).

The Sari IQ report also lists down the top products in their network by gross merchandise value, which include detergents, 690 million pesos (US$12.46 million); powdered coffee, 600 million pesos; shampoo, 410 million pesos; canned fish and seafood, 350 million pesos; and instant noodles, 200 million pesos, which may be considered essential products.

This indicates that sari-sari stores are more than just a refuge for relaxation but still serve as the most convenient source of essential goods, the report says.

Sari-sari stores outside of urban areas record the highest sales. Regions with the highest sales are Calabarzon (Region IV-A), 2.83 billion pesos;  Cagayan Valley (Region II), 1.82 billion pesos; and Central Luzon (Region III) 1.58 billion pesos. Meanwhile, traditional urban centres in the country, Metro Manila (National Capital Region) and Central Visayas (Region VII), only place fifth and sixth.

Business intelligence tool

The report was based on the extensive data collected through Packworks' business intelligence tool, Sari IQ. Packworks, with its network of over 270,000 sari-sari stores nationwide, recorded more than 8.2 million transactions and sales of more than 15,000 stock-keeping units in 2023.

Sari IQ provides real-time and historical information on consumer expenditures and can be customized to generate evaluations for various product categories sold in retail.

It enables retailers and multinational brands to gain complete visibility into sari-sari stores' operations, allowing them to extend their slow-moving products and services to a wider pool of customers.

Analysis through the platform also helps them develop data-driven decisions to boost sales of sari-sari store owners by understanding and predicting consumer demand within their area.

Founded in 2018, Packworks, through its integrated mobile app, enables sari-sari stores to digitize their operations. The app provides pricing tools, inventory management, and sales and revenue tracking. The company also offers inventory financing service to help them grow their businesses.

Packworks promotes financial inclusion through its microentrepreneurship programme SariSkwela in partnership with social development organization Bayan Academy.