NEWS WIRE: Philippines: Hapinoy Expanding Microfinanced Retail Franchise Model

Source: PSFK.

Original article available here.

NEW YORK, July 8 – Sari-sari stores are make-shift local community convenience stores that serve the vast underprivileged majority of the Philippines. There are about 650,000 of them scattered around the nation and virtually all of them are individually owned. For years, ambitious local entrepreneurs have dreamed of consolidating this massive retail category. A bunch of them dreamed with a social conscience and are now finding success with a venture called Hapinoy.

Hapinoy seeks to become a “preferred business partner of the poor” by partnering with local microfinance institutions to provide women borrowers with top credit scores a Hapinoy sari-sari store franchise. Hapinoy provides value by serving as a retail consultant, brand marketer and merchandise consolidator (it deals with manufacturers directly). The company makes money by getting a percentage off the merchandise, which ties its long-term interests with each individual store’s sales growth and inventory turnover. Because of the network effect and economy of scale achieved by being under one Hapinoy brand, store owners still end up with higher margins compared with traditional unbranded sari-sari store owners.

Hapinoy store owners also learn best practices on key retail essentials such as inventory management, store efficiency and branding. They achieve better negotiating power for merchandise, financing and even technology. Some stores are already planning to install internet kiosks to provide their communities with much-needed online access. The social community factor has been retained as well: stores allocate space on the walls for posters promoting local events and seminars.

This business is not only ideals-driven, but strategically successful as well. Because of how asset-lite the model is (microfinancers provide the capital and absorb the financial risks, lenders build/convert the stores, manufacturers supply the goods), the company has achieved a considerable level of scalability. Hapinoy is planning to open/convert 40,000 stores by the end of 2008 and 100,000 stores by the end of 2009.

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