Philippines: Hard discount stores Dali and O!Save disrupt retail market with soaring sales

Discount Retail Stores Dali and Robinsons Retail Holdings Inc.'s affiliate, O!Save, are giving stiff competition to traditional supermarket and convenience store chains by registering strong sales growth while expanding their reach in the retail market.

Based on research by Abacus Securities Corp., sales of Dali jumped 57 percent to ₱34.1 billion in 2024 from ₱21.8 billion in 2023, while O!Save’s annual sales surged 134.6 percent to ₱13.6 billion last year from ₱5.8 billion in 2023.

“Clearly, these two are at least partly responsible for the lackluster earnings growth of its much larger competitors in the past few years,” added Abacus.

The brokerage noted the “significant inroads hard discounters have made in the local market with Dali leapfrogging MRSGI (Metro Retail Stores Group Inc.) in terms of revenues last year.”

MRSGI posted a 4.9 percent sales growth to ₱28.6 billion last year, lower than Dali’s ₱34.1 billion, when it was higher at ₱27.2 billion compared to Dali’s ₱21.8 billion in 2023.

Other major grocery retail chains also posted single digit sales growth last year with SM Food (including Alfamart) rising eight percent to ₱252.9 million from ₱234.2 million, Puregold Price Club (excluding S&R Membership Shopping) up by 8.3 percent to ₱144.9 billion from ₱133.8 billion, and RRHI Supermarkets with a 4.7 percent hike to ₱120.3 billion from ₱114.9 billion.

Only Philippine Seven Corporation, the local franchisee of 7-Eleven convenience stores, posted double-digit revenue growth of 13.8 percent to ₱90.11 billion last year, up from ₱79.19 billion in 2023.

However, Dali has yet a long fight ahead of it, and doubts have been raised on its continued viability since it has yet to break even, much less turn a profit.

Despite growing revenues by 52 percent to $595 million, Dali's net loss last year increased five percent to $33 million, liabilities jumped 111 percent to $355 million, and equity shrank 73 percent to under $13 million.

“Management expressed confidence margins will turn around, but if Dali eventually does fold, it will be a significant positive for retailers PGOLD, RRHI, SM Retail, and MRSGI… So keep your ears on the ground for any news on Dali's fate over the next six to 12 months,” said Abacus.

PhilSeven Operations Director Francis S. Medina said last August that the company is getting stiff competition from hard discount stores, which are “opening left and right.”

“Yes, they are a threat. On the perspective of site acquisition, they practically open on the same areas where we want to open” so they compete one site bidding, said Medina noting that, “At the same time, they focus mainly on residential clusters, which we are also going into.”

However, he said they have an advantage over hard discount stores since not all of them operate 24 hours “so it's a big plus for 7-Eleven since most of them open at 6 am and close at 10 pm, while we are open 24 (hours).

“Second big advantage is we serve fast food, which most of them don't have. Third is we have dining spaces, so this gives customers more options. They can sit down while shopping.”

Amid this challenging environment, medina said “our objective is to acquire most of the best sites as soon as possible to prevent or make it difficult for any competition.”

Read more: Manila Bulletin - Hard discount Stores Dali, O!Save disrupt retail market with soaring sales

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