Despite the inefficiencies of a sari-sari store, it won’t vanish in the near future. For one, it’s easy to start a sari-sari store. How to start? Just cut a window (facing the street) through the wall of your house, shop for the most common grocery needs from the cheapest source, add around 20% to the purchase price, then divide the amount using the number of pieces in that package.

 

There’s an estimated 700,000 sari-sari stores throughout the Philippines. That’s roughly 1 sari-sari store for every 130 Filipinos. Along a 50-meter stretch of road in a squatter area somewhere in Malabon, there are around 45 sari-sari stores.

 

The rules of the game almost ensure that the sari-sari store remains small. Its market – the immediate neighborhood – is generally static. The population within the vicinity may grow, but when a sari-sari store in a neighborhood becomes successful, another pops up because of the relative ease in setting it up. The new store eats into the profits of the rest, effectively negating any increase in the market size. Bigger purchases are made somewhere else, perhaps in a supermarket or a “bagsakan”, where the sari-sari store themselves buy their products. The “bagsakan” is the middleman, where suppliers deliver the products in bulk – with the standard discount and the bulk discount.

 

For more discussion, please click here to read the previous post on Entrepreneurship, Innovation and Sari-Sari Stores.