Food and health products to dominate Philippine's consumer spending

Even e-commerce platforms are expected to prioritise delivery of grocery orders.

Consumers in the Philippines are expected to focus their spending on priority purchases like food and health-related products, as lockdowns have been put in place in Luzon island, according to a Fitch Solutions report.

Analysis of data from China during lockdown and from South Korea under social distancing measures confirmed that consumers in those circumstances prioritise essential spending over all other categories. They may also ramp up their purchases of food and drink from groceries and supermarkets as the lockdown forces them to cook at home.

They may buy from supermarkets, which are allowed to remain open as part of essential services, or from online delivery platforms that can transport grocery products and specific goods.

Already, there has been evidence of panic buying of food and alcoholic drinks, especially in dense urban areas such as Metro Manila where relatively richer consumers can stockpile. More over-the-counter medication sales is also expected.

Major shopping malls have also either been completely closed, or only allow units associated with grocery, pharmacy or takeout food services to be open. This is also expected to hold for non-essential e-commerce shopping such as for clothing and footwear, in part due to delivery companies prioritising the increased essential food and grocery orders.

This means that retail shops selling clothing, home, and electronics are tipped to suffer, as they lose out on an entire month’s worth of sales revenue. Still, some retailers may still be able to generate some amount of sales if they can get onto grocery delivery platforms.

With consumers essentially confined to their homes, the total household spending is projected to expand by just 6.7% YoY in 2020, below the 9.8% YoY growth recorded in 2019.