Monday, April 17, 2006

The "sari-sari mentality"....

Image hosting by Photobucket
Photo from the Sari-Sari story, © 2002 by Jim Richter.

While standing in line in a large chain supermarket near my house a couple of days ago, I quietly observed dozens of carts overflowing with various dry grocery items, like various canned goods, instant noodles, snacks, juices, soaps and toiletries, etc.

Here I was, trying to buy a loaf of bread, a bottle of ketchup, a bottle of seasoning, and some other stuff, surrounded my these massive shopping carts filled with what looked like tons of grocery items. It's obvious that these copious amounts of groceries aren't for personal use. Rather, it's more than likely that these items will be sold in one of the probably thousands of sari-sari stores dotting the Philippine suburban landscape.

Sari-sari is a Filipino term which means "variety". Hence, a sari-sari store can be translated as simply a "variety store". Sari-sari stores are a staple of Philippine life. They're literally everywhere, offering various goods for sale from virtually every street corner and everywhere else in between.

In suburban residential areas, much like the one I reside in, you can hardly walk a few meters without coming across one of these stores. In some places, these stores stand shoulder to shoulder with other similar stores, offering similar goods, and often at similar prices.

Which brings me back to my predicament. I'm stuck in this slow moving checkout line, all because of these sari-sari store proprietors, who are stocking up on goods to sell. I scan the various other checkout counters in the distance. Virtually all of them are lined up with full shopping carts containing similar items.

You know what? I think the typical Filipino is a poor entrepreneur. There. I said it. I just hope I don't get flamed for having a negative opinion of the average Pinoy's business acumen, but hear me out first. The reason I came to this conclusion is the fact that the majority of Filipinos, instead of offering some unique product or service to the community, invariably fall prey to the "me too" style of entrepreneurship. For convenience, let's call this phenomenon the sari-sari mentality.

The sari-sari mentality is a style of entrepreneurship wherein a person, either because of the lack of ingenuity or creativity required to come up with a totally unique business model, or at the very least the refusal to take the financial risk of putting up a unique venture, invests in exactly the same type of business other people have invested in. The side effect? A marketplace awash in similar businesses. Don't bother looking up this definition in some business book. I just made it up.

The sari-sari store is a perfect example, hence the name. What's the point in setting up a variety retail store when there's virtually one almost everywhere? And yet, more and more are sprouting up. The vast majority of these stores probably aren't even licensed to do business by their respective local governments, much less pay taxes.

With so many of them around, do any of them actually make money? Surprisingly yes, though I would imagine the profit margin for such ventures can't at all be that large. The profit in the retail industry can be attributed to volume, and not markup. And small stores probably don't have the capability to deal in huge volumes.

Filipinos, traditionally, seem to be really susceptible to the sari-sari mentality. If you think about it, it isn't really surprising why most successful Filipino businessmen and industrialists are more often than not of foreign descent. They're more likely to make aggressive business decisions, which often pay off in the end. Pure blood Pinoys on the other hand, when it comes to business, typically just play it safe.

We've seen this mentality rear its ugly head before, lots of times. The story typically goes like this: a new and unique business opportunity sprouts up, everyone else gets in the action, there is a saturation of the market, and inevitably the market crashes altogether.

I can think of a lot of businesses which went this way. During the 80s there was the litsong manok (roast chicken) craze. Everyone wanted in on it, leading to an overabundance of businesses wanting to fill the demand. Eventually the craze collapsed in on itself, everyone got tired of eating roast chicken, and today the litson manok industry has consolidated itself into a handful of large chains and a few independent businesses, and outlets aren't even that common anymore.

A few years ago there was the tapioca balls "pearl shake" craze (internationally it's known as "bubble tea"). Same story, everyone wanted in as well, leading to market saturation. Only Zagu seemed to have survived the pearl shake wars, with perhaps Orbitz a distant second. I have no idea what happened to the rest. I guess most of them went under.

And in recent memory there was also the internet café/network gaming fad. These businesses sprouted up like mushrooms after a stormy night, filling a perceived demand for people wanting to surf the net, or virtually kill each other in Counter-Strike and other video games. Yes, the demand was there, but competition became so tough that prices dropped way below the threshold of profitability. Nowadays the large franchises (like Netopia) have dominated the market, while some independent establishments have continued to make their businesses thrive, particularly in niche areas.

I've read somewhere that 99% of businesses fail within the first five years of operation. I'm not really surprised, given the lack of originality in the commercial scene. I too was a victim of that statistic at one point in my life. What can I say? I'm not that hot of an entrepreneur myself. Or maybe I was just associated with the wrong people. Or both.

Let's face it, the "me too" attitude is a very safe and reassuring way of starting up a business, hence its prevalence. The perception is: "Well, if he's making money, I should too." Sadly, it doesn't always end up that way. The market is strewn with the decaying ruins of businesses that wanted to sell what everyone else was selling and not much else.

I just hope that we Filipinos start to be more creative in coming up with commercial ventures. In the same vein, I think we should learn to take more risks in business. Only if we do so can we have any hope of being successful in the market. Sigurista lang kasi talaga tayong mga Pinoy.

And I'm not just talking about the local market. With globalization starting to rear its ugly head, if we don't shape up, we're all going to be eaten alive in the global marketplace. And that won't help our economy at all.

The sari-sari mentality can only take us so far. It's about time we do something different and unique for a change.





Anonymous snglguy reacted...

I agree with you with regards to the Filipino mentality Ron, I was one of the statistic too.

Almost 10 years ago, we opened up one of the first cybercafes located inside the mall, but had to close down a few years later because the high rental fees was making us lose out to the competition that suddenly sprouted outside the mall. We just couldn't keep up with their rates.

And to think, we were one of the first to offer broadband using Destiny cable. So much for my business venture....

I think I should also add envy aside from the 'me too' attitude of a lot of Pinoy entreprenuers...

April 17, 2006 9:41 AM  
Blogger Ronald Allan reacted...

Sad to hear that Guy. What can I say? It happens to the best of us. Most Pinoys, particularly the masses nowadays go for price, to the exclusion of quality. That's why a lot of cheap knockoffs often sell faster than the real deal.

Same with services, like the cafe you opened up. Even if its broadband, they would rather go for the cheap dial up variety...simply because it's cheap, and for no other reason.

It ain't easy competing in this type of marketplace where all you have to do is undercut your competitors to survive...

April 17, 2006 5:03 PM  
Blogger Eu-Leh reacted...

Given the very limited amount of money a poor pinoy entrepreneur has, sari-sari store is the easiest and most affordable way to invest a few hundred bucks to at least ease the everyday burden of ways to look for additional income. yes, they can dream big but where they can get the fund to finance it? do you think banks and other lending institution will trust them? It goes down to how the government should do to help the poor entrepreneur by at least offering and honest-to-goodness free livelihood training programs coupled with interest-free loans. Same thing with big businessses and perhaps rich individuals, lend a hand to poor entrepreneurs. Share the ideas. Give free unrestricted information.

just my opinion though..

Eu-Leh

June 24, 2006 4:38 PM  
Blogger Ronald Allan reacted...

That's a pretty valid point. For me though, the issue isn't really whether they can afford big businesses or not, since we know that most can't. Its the lack of originality, or the "me-too" syndrome that I find bothersome. Instead of coming up with something new, most people capitalize instead on the ideas of others.

The effect is that this sort of business environment is that it doesn't really encourage creative entrepreneurial thinking, which is sad.

Its the lack of originality which is shackling our economy. We can't just keep on recycling other people's ideas when it comes to business. As a result, everyone is competing with each other, glutting the field. In the long run, nobody wins, not the original idea maker, not the copiers, no one.

While the government should do its part to encourage small business, a full, red-blooded entrepreneur shouldn't have to rely on government assistance. We all know the government aid leaves a lot to be desired.

Its a vicious circle though. When the economy is down, capital is difficult to come by. But how can you stimulate the economy when you don't have capital for business?

I think I'll explore this topic more in the future. There's probably more to this than what we see on the surface.

Thanks for your comments. :-)

June 24, 2006 6:29 PM  
Blogger Ces reacted...

This is very interesting. Obviously you expect people to react violently to your thesis, hence "Post a violent reaction". Is there a way to just post a "comment"? (I am not a violent person):-) Sari-sari store is the most attainable business for the regular Filipino without having to borrow a loan from inept and unaccomodating Philippine banks nor having to go through a business license through a corrupt government. I think it is wonderful that these Filipinos try to earn a living the honest way. They could make it big from the start like the stores in US strip malls that in a couple of years declare bankruptcy. It is everywhere in the world. I see nothing wrong with sar-sari stores serving small communities in the rural areas. It makes no sense for the Filipinos to go to the market just to buy a tomato if they can go down to the sari-sari store and get it for (I don't know how much it costs now, it used to be 10 cents to 25 cents per tomato.) It seems your gripe was evoked by the long lines in the grocery store. You should really suggest an Express check-out (10 items or less) but these big grocery store chains won't care for customer service because they are after all, big businesses. :-)

September 09, 2006 8:19 PM  
Blogger Ronald Allan reacted...

Hi Ces. Thanks for your "unviolent reaction" :-) Don't worry about "violent reaction" thingy, it's just my schtick since "comments" seem so boring...:-)

Yeah, perhaps waiting in line with a small pile of groceries surrounded by these entrepreneurs got my goat. :-) I would have used the express lane, but I had to use a credit card, and the express lane just takes cash. Haha. :-)

Going to the topic at hand, true, there's nothing really wrong about venturing into a small-scale retail business. It's an honest trade for the most part, I'll give it that.

I just wish they didn't overdo it so much. I'm not exaggerating when I say that there are some streets with sari-sari stores every few meters or so.

A little creativity probably won't hurt though. :-)

I take it you're from here, or you've been here before? You hit everything on the head, from the price of tomatoes (much higher now though) to corruption in government.

Things, sad to say, are probably worse now than you remember it though. But then again, I guess that's how it is everywhere. Sorry 'bout that, it's the cynic in me speaking. :-)

September 10, 2006 8:20 PM  

Post a violent reaction

Links to this post:

Create a Link

<< Home