EXEC. VP (Store Specialists Incorporated – Rustan’s Marketing Corporation)

What have been some of the most significant challenges throughout the five decades that Rustan’s has been leading the retail industry?

We have concentrated mainly in the upper market segment. We built that leadership position by starting out with department stores. After that we came up with supermarkets, and then with a wholesale distribution company, which is Rustan’s Marketing Corporation. The company took advantage of the fact that we have brands within Rustan’s Department Store that could now be sold to other department stores such as SM, Landmark, Robinsons and Mercury Drug. After Rustan’s Marketing Corporation, we came up with another company around 18 years ago, which is Store Specialists, Inc. That took advantage of the fact that there are more and more shopping malls that have been introduced in the market. We have been going along with the tide in terms of the development in the retail sector of the Philippines. The retail sector was liberalized 5 years ago. Since then, there has been interest in the Philippines, in terms of a look-and-see approach of foreign retailers. A lot of them have shied away in terms of investing in the country themselves due to the perceived small size of the market and at the same time realizing that it makes sense to have local knowledge as part of your entry in the Philippine market. We are not a primary market such as Hong Kong or Singapore. It took a while to convince them to visit the Philippines. We are very happy with our partnership program. We currently have 3 stores in operation. This year alone, we are looking at another two stores.

In which other ways are you taking steps to acquire franchises and exclusivity of brands to come to the Philippines?

We’re always in the look out. In the past, it was us going around, searching and knocking on people’s doors and then asking them about their interest in the Philippine market. Today, we have developed and the market has developed. We do get a lot of inquiries from brands that have an international perspective. On our side, it’s a matter of keeping our ears on the ground. There are many times when the brand may not be doing well in another country, but in this market it does very well, and vice versa. It’s a matter of taste and consumer preferences.

How has the strengthening of the economic growth of the country affected or contributed to the growth of the sector as well as the consumer demand?

From a consumer’s standpoint, the first two months of this calendar year has been quite strong. We’ve seen that in an obvious rise on our sales. We’re seeing better quality sales at this point, meaning more of our products are being sold at regular prices. The other obvious change right now is with the increasing standing power; people are becoming more sophisticated in their taste.

What do you expect to be the forecast for 2007?

I think 2007 is definitely going to be a stronger year. An election year is always a strong year. There are a lot of activities being generated by the campaigns. More spending.

Who do you consider are the main players and your main competitors in the sector?

In terms of the upper market segment, I think I can say that there’s really not much in terms of the same size and scale. Our biggest competitors could really be those in Hong Kong and Singapore. In the past, there was great reason for the upper market Filipinos to travel to Hong Kong and Singapore to shop because of lack of availability here in the Philippines. With the adjustments of the duty structure and our efforts to make sure that we are not priced too high versus prices in Hong Kong, specifically; we’ve actually been successful in getting them to the shop locally.

Have you been successful to get Hong Kong or Singapore shoppers to come and shop here because of the comparative price?

No, we haven’t. That’s largely because I think the government and the retail industry should work together in terms of promoting the Philippines as a possible shopping destination. Right now, we don’t have a marketing campaign towards that. I don’t think individual members of the local retail industry will have the financial resources to do the marketing campaign at that grand scale without the government’s help. I think the government has done a good job in promoting the Philippines as a tourist destination. Rightly so, it focuses on the natural resources but they do not even show snapshots of the shopping environment of the Philippines. There were efforts in the past driven by the Department of Tourism but it didn’t really prosper. I think a dialogue should be established.

In what ways are you ensuring Rustan’s stays abreast of the competition?

We don’t see ourselves in competition with the shopping malls. We are part and parcel of the shopping malls. From a competitive vantage standpoint, as a group we just ensure that we are up-to-date in what has been offered internationally, that we are up-to-date in terms of the Filipino consumer demand. What we’re doing as well is giving the Filipino consumer the right choices and giving them the ability to choose what they want to buy. It’s a matter of educating the consumers as well leading them into being more sophisticated in their personal choices.

Do you believe that there is a sophistication process? Has that been a challenge?

Not necessarily. I don’t think it is a lack of ability to stand out. It’s realizing that these choices are in fact, available to them in the Philippines. In the past, that choice was never there. All of the brands that we carry are exclusive to us. In terms of the existing brands, we have regular meetings with them, plus they come to the Philippines quite often. A lot of the brands come to visit us at least once a quarter. They get to see what the market is all about, the new developments in the country, and how our operations and operating standards are. In terms of new brands, we travel quite extensively. We do our own song and dance about the market because a lot of people haven’t really had the chance to visit the Philippines. I think they are very pleasantly surprised at how the Philippine market is in fact more sophisticated then they anticipated.

We live in an era where brands represent almost more than the assets those brands represent. What does the brand Rustan’s represent?

What we represent ourselves to be is the company that brings the best to the world, to the local consumer. What we offer to the different brands is the assurance that they have professional collaborators handling affairs. We will uphold the international operating standards in the Philippines. Our main goal is to make the customers feel that they are entering a store here in the Philippines that is no different from entering the same store anywhere else in the world.

In which ways is Stores Specialists, Inc. contributing to improving the image of the Philippines internationally not only to brands but as well for the consumers?

We have not been specific in our efforts to target more foreigners to shop in the Philippines. If you look at our internal sales today, our contribution from foreign shoppers has in fact increased, and that is predominantly from Koreans and Japanese that have been coming in the market.

What have been some of the main challenges and contributions in your career with the Rustan’s Group?

One of the key challenges for us is really convincing these international brands that there is, in fact, an opportunity here in the Philippines. There are instances when we finally convince them, yet something will happen and we will start from step one again. It is an up and down situation. Thankfully, for the past years, things have been stable. Our main challenge really was promoting the Philippines as a possible market for these brands. We may not be a primary market but we’ve been successful in many places. Case in point being Starbucks.

Do you have a specific message that you would like to send to our readers and investors who are looking at the Philippines?

The painful reforms that had to be done over the past years have finally gone through and the obvious benefits are beginning to bare their fruits. The country is stable now. The best time to look at our market would be at this time. Being a Filipino businessman, we are always open to working with the international retailers or businesses in order to help them find a certain market segment and at the same time better ourselves.