Modern grocery concept that is adaptive to changing customer behavior
We believe we have the most modern grocery concept which combines e-commerce-integrated last-mile fulfillment capabilities with the traditional supermarket, a hybrid model that is adaptive to changing customer behavior. The dual function of our physical stores as last-mile fulfilment centers of the www.allday.com.ph online shopping platform allows us to seamlessly download at the onset our technological capability to each location, thereby avoiding the tech adoption pitfalls commonly being encountered by legacy supermarkets. Each of our stores is equipped with an automatic inventory ordering system which is programed to place orders to suppliers for additional or replacement inventory on its own when it predicts that there is a need for such inventory, taking into consideration the sales made during the period and pre-set thresholds determined by a regular review of the store’s merchandise mix against emerging industry and customer trends. This shortens the learning curve of newly-opened stores and makes them efficient from commencement of operation.
Our online shopping platform is also integrated with industry leading technology services, like PayMaya and DragonPay, for secure online payment processing, and with GetAll, for the last mile delivery of ordered products. To distinguish our e-commerce platform from the influx of other online shopping platforms, we are the only one that provides an on-demand 24-hour Delivery Service.
The integration of digital customer touchpoints also provides a source of valuable customer insights which, coupled with our active analysis of sales data across all our product categories, enables us to identify sales trends across our store network and capitalize on market opportunities and optimize our inventory management. We are able to quickly and consistently recognize market behavior, identify shifts in our customers’ preferences, and introduce new concepts to respond to the needs of our target market and enhance and elevate the customer experience in our stores.
The COVID-19 pandemic accelerated a number of customer behavior shifts. As a result of the community quarantine restrictions it induced, customers moved away from in-store shopping to other platforms. In response, we rolled out the Personal Shopper Service program across our store network in April 2020 which allowed our customers to simply send their orders through our dedicated hotlines for fulfillment by our Personal Shoppers in our stores and delivery direct to their homes. We believe we are the first supermarket chain in the Philippines to offer such service.
We were also able to scale up our online presence in a short period of time as the lockdowns were first being imposed by partnering with marketplaces and on-demand providers. AllDay maintains business relationships with Metromart, Pick A Roo, Grabmart, Pandamart, Lazada, Shopee, and the Villar Group’s very own Get All.
We have initially developed and installed self-checkout kiosks in two of our stores to improve health and safety protocols and allow our customers to observe social distancing measures in our stores. Our self-checkout kiosks also upgrade our customer experience by providing customers the option to shop and pay at their leisure.
Additionally, we believe we have also pioneered concepts that evidence our ability to adapt to evolving consumer behaviour. In 2016, our initial supermarket format introduced the “Paluto” service, an in-store food preparation service that leverages on our Fresh category by providing customers the option to buy fresh meat, poultry and vegetables and have these prepared on the spot in our “Paluto” kiosk. Alongside this, we also rolled out Gastroville in the same year. Gastroville is an in-store food hub, curated to reflect international cuisines and is akin to the hawker centres found in Singapore. The “Paluto” and Gastroville sections in our stores are seamlessly integrated in our store’s selling area, provide additional foot traffic in our stores, and cater to our customers who consider grocery shopping a family activity.
Elevated customer experience rooted in premium aesthetics and innovative in-store concepts
We believe we have a distinct supermarket concept that caters to the tastes and preferences of the Filipino consumer through a combination of store aesthetics, comfort, accessibility and convenience which allow us to provide an elevated customer experience. We believe that our stores, as a result, attract a discerning clientele who has a relatively higher buying power and puts a premium on their overall shopping experience. These target customers belong in the middle and upper income classes which, combined, has grown to include 54.2 million Filipinos in 2020 from just 37.6 million in 2015, according to GlobalData.
At the core of the AllDay shopping experience is our extensive offering of fresh, food, and non-food products with approximately 3,600 local and international brands, with each store carrying between 30,000 to 40,000 SKUs. In addition, about 23% of our stores’ SKUs are curated international brands of sought-after or difficult-to find products as well as locally preferred regional brands that appeal to our target market. According to GlobalData, over half of AllDay’s crisp range is comprised of international brands and is more comprehensive than leading competitors.
Our modern and functional store design puts emphasis on enhancing the shopping experience of our customers by providing wider aisles, calibrated lighting, and unique store decorations. We also ensure that each of our stores has distinctive aesthetics so that no two stores are exactly alike. This operational approach to store design allows each store to be adaptive to the changing preferences of our customers.
We also believe we have a pool of trained staff and established policies and procedures that enable us to provide consistent and excellent customer service to our shoppers. Finally, our value-added services,such as Paluto, Gastroville, and Personal Shopper Service, and our self-checkout kiosks round out the AllDay shopping experience by providing reliable, fast, and convenient options to our customers.
These pioneering initiatives shift our competitive differentiation towards experience and away from pricing, allowing us to implement a pricing strategy that is relatively more resilient against inflation risk. We believe that this also positions us to capture the growth in the particular market segment in which we play. Based on projections by GlobalData, the total spending at supermarkets by middle- and upper-income segments is expected to increase from ₱570.4 billion in 2020 to ₱1,438.8 billion in 2030. See the section entitled “Industry Overview” on page 61 of this Prospectus.
We also believe that being part of the AllValue retail ecosystem complements the AllDay shopping experience by offering customers a complete one-stop shopping convenience. AllDay is part of AllValue (the Villar Group’s holding company for its investments in retail businesses), which operates AllHome one-stop home centers, Coffee Project, and Bake My Day artisan bakeries, among other retail concepts. AllValue stores are typically located near each other in the same shopping center and in particular, our existing AllDay stores are located near AllHome, Coffee Project, and Bake My Day stores. We believe that the diversified retail offerings provided by AllValue, together with other entertainment and lifestyle establishments offered by the Villar Group such as Vista Malls, Starmalls, and a host of other retail locators and concepts create a retail ecosystem that caters to the various shopping needs of our customers.
Best-in-class, superior e-commerce platform driving growth in user base
We believe our online shopping platform www.allday.com.ph is among the leading, user-friendly e-commerce platforms and will be able to drive significant growth because of the accessibility, convenience, and safety that it offers. In anticipation of higher customer engagements via online channels as internet adoption continue to rise in the Philippines. Internet user penetration is anticipated to reach 72.3% of the total Philippine population by 2025 from 65.6% in 2020 per GlobalData. We believe that having a superior e-commerce platform would place us at the top-of-mind of customers who are adopting online shopping.
Our e-commerce platform www.allday.com.ph currently serves a number of NCR cities, namely, Mandaluyong, Makati, Taguig, Manila, Parañaque, Quezon City and Las Pinas. It is also operational in the Greater Manila area through operations in Sta. Rosa (Laguna), Tagaytay, Cavite and Malolos; in other parts of Luzon through operations in Cabanatuan, Gapan, Cauayan, Santiago (Isabela), San Fernando (Pampanga), Bataan and Naga; and in the Visayas through operations in Talisay (Cebu), Bacolod and Iloilo. In addition, the Company is present in online third party platforms and marketplaces such as MetroMart, Pick A Roo, Lazada, Shoppee, GrabMart, and PandaMart. As of June 30, 2021, total online sales accounted for 2.78% of total sales from almost nil as of June 30, 2020.
Gearing towards the continuation of the growth of our online user base, we migrated our current platform to a PWA format which allows for improved functionality and usability for customers who do their shopping either on desktop computers, mobile phones, or tablets. This means that the familiar interface and in-site functionalities are uniform regardless of the device used which is crucial given the prevalence of mobile phones in the country. Philippine mobile penetration is expected to rise even further from 127.5% to 130.3% in 2020 according to GlobalData, implying that more and more Filipinos would own more than one mobile device.
Strategic and sustainable physical store network expansion, arising from our synergy with the country’s leading homebuilder and its retail ecosystem
We strategically locate our stores in established residential communities and commercial projects of the Villar Group. This ensures that the expansion of our store network is sustainable by ensuring that our new stores are in areas with an immediate consumer base and a catchment area that can sustain our store presence.
The Villar Group is one of the largest integrated property developers in the Philippines, with a presence in more than 147 cities and municipalities nationwide. As of June 30, 2021, the Villar Group has a land bank of over 3,000 hectares across the country, located in areas in proximity to major roads and primary infrastructure. We believe that the residential and commercial projects of the Villar Group, typically located in mature and well-established communities, provide a large customer base for our stores. As part of the Villar Group, we have access to these communities that are suited to our operations as well as gain insight on a significant share of the Philippine home market, giving us an in-depth understanding of customer preferences and the demographics of our store locations. Our stores are typically located in what we believe are high retail traffic locations, primarily in shopping malls and residential communities of the Villar Group. As of June 30, 2021, 32 out of 33 stores were located on properties leased from the Villar Group, all of which were located near Villar Group residential projects. See “The Company—Store Network Expansion Plan” on page 109 of this Prospectus. We believe we are well positioned to benefit from the Villar Group’s land bank, extensive project pipeline, in-depth knowledge and resources to pursue a strategic, systematic and sustainable store expansion plan.
A template of the vision of the Villar Group for new expansion areas is the Vista Alabang where it has applied its “Communicity” concept by integrating residential, retail and BPO developments along with additional components such as utilities and township infrastructure, hotels, healthcare facilities and educational institutions. It has grown into the most expansive integrated urban development in the southern part of Metro Manila with over 45,000 households and covers a total area of approximately 1,500 hectares strategically located where the cities of Muntinlupa and Las Piñas, and the provinces of Cavite and Laguna meet.
We also have access to contractors that have long-term strategic partnerships with the Villar Group. These contractors are committed to the Villar Group’s projects, thus ensuring that we have reliable contractors to support the expansion of our store network. Particularly, the Villar Group’s pool of contractors include a contractor accredited with the Philippine Contractors Accreditation Board (“PCAB”), which has a “AAAA” rating from the PCAB. We have access to over 20,000- strong manpower complement that can be readily deployed to commence building and fit-out of a new store site.
Further, AllDay also benefits from the AllValue retail ecosystem in the expansion areas as the other AllValue stores also attract the clustering of the same target customers as AllDay which are those within the upper-middle income to upper income segment who value experience-based shopping. The presence of other AllValue retailers also increases the likelihood that the existing customer base in the expansion areas would already be members of the AllRewards program which has over 635,000 cardholders as of June 30, 2021. This benefits the Company at the onset as AllRewards cardholders typically spend 50% more than the average AllDay customer.
Established operational expertise, highly scalable store and micro-fulfillment hub hybrid business model that allows for expansion
Since our incorporation in December 2016, we have opened, on average, five stores annually and have grown our store network from seven stores in 2016 to 33 stores as of June 30, 2021. We believe that as we expanded our store network, our management team has developed and/or gained significant experience and knowledge relevant to the establishment and operation of a chain of supermarkets. We believe we have established operational principles, procedures, and policies that guide our store layout and design, inventory management, logistics, staff training system, and customer service which enable us to efficiently implement our distinct supermarket concept as we further expand our store network. We have also established strong relationships with the country’s leading supermarket suppliers and other key partners in the supermarket business which we are able to leverage to control the procurement and operating costs of our stores and thereby improve our profit margin, to readily replicate and fine tune our extensive and diverse product offerings and to ensure continuing support for the operational requirements and targets of each of our stores.
In the course of operating our e-commerce platform, www.allday.com.ph, we have also developed operational principles, methods and procedures that enable us to scale and replicate our hybrid business model of using our physical stores as micro-fulfillment hubs for our e-commerce operations in a seamless manner. Through the establishment and fine tuning of these e-commerce operations, our stores have become fully capable of fulfilling the dual roles of physical store and micro-fulfillment hub, which allows our e-commerce capabilities to expand in parallel to our physical store network.
Demonstrated record of significant growth and profitability
We believe we have delivered strong sales and net profit growth since inception. From 2017 to 2020, our sales grew from ₱1,477.4 million to ₱7,931.0 million, on the back of the successful execution of our store expansion plan. We were able to strategically locate our stores in prime shopping districts and densely populated areas, allowing us to efficiently maximize our exposure and reach our target customers.
In 2020, at the height of the pandemic-induced mobility and business restrictions, we were able to sustain the growth in our topline to end the year with a record ₱7,900 million in sales. On top of being able to continue operations due to the essential nature of our business, we were able to propel sales through various value-enhancing initiatives such as our Personal Shopper service and 24-hour delivery model.
The increase in the scale of our operations has provided us with greater purchasing power with suppliers which, in turn, has increased our product offerings for our customers and improved our margins. Our net profit almost quadrupled during the past three years, rising to ₱220 million in 2020 compared with just ₱58 million in 2018.
In sum, we have consistently grown our physical presence since the start of our operations in December 2016, increasing the number of our stores almost five times from 7 to 33 in just over four years. We have also increased our SKUs from less than 30,000 to almost 40,000 over the same period.
Experienced and founder-led management team with track record of successful expansion
Our experienced and dedicated management team is led by our founder and Chairman, Mr. Manuel B. Villar, Jr., and his children, Mr. Manuel Paolo A. Villar and Ms. Camille A. Villar, all three of whom have a proven track record of success. Mr. Manuel B. Villar, Jr. founded Camella Homes in the early 1970s and successfully managed the company over the years, to become the largest homebuilder in the Philippines now known as Vista Land and the Villar Group. Mr. Manuel Paolo A. Villar has been Chief Executive Officer and President of Vista Land & Lifescapes Inc. since 2011.
At present, Vista Land has an unparalleled coverage, with its presence in 147 cities and municipalities in 49 provinces across the Philippines. It has also managed to grow its recurring income portfolio via the rollout of leasable commercial spaces in the form of BPO offices or as malls and retail stores. As of June 30, 2021, VLL’s total leasable gross floor area was about 1.6 million sq.m.
Ms. Camille A. Villar has been managing all the retail business operations of the Villar Group under AllValue, and together with our Chairman has overseen the rapid growth and expansion of the AllValue group of companies over the last eight years.
A key achievement in this period of growth is the success of AllHome, the country’s pioneering one-stop full-line home center – as of June 30, 2021, it has a total of 55 stores which is more than double the number of its stores when it was publicly listed in 2019. It is currently maintaining a track record of growth and profitability.
The vision and entrepreneurial spirit of our management team have played a critical role in establishing the AllDay brand and developing our business. Since the launch of the AllValue brand in 2014, we believe our founder-led management team has proficiently guided the expansion of the AllValue retail ecosystem to include AllHome one-stop home centers, Coffee Project cafes, and Bake My Day artisan bakeries, among other retail concepts and have grown the brand equity of AllValue through the years.