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Introduction of the Study

Retailing is among the largest growing segments of the Philippine economy

(MCA Limited, March 2012). The country’s retail industry is important to the national

economy as it accounts for approximately 15% of the Philippines' total Gross National

Product (GNP) and 33% of the entire services sector. Retailing in the country thus

employ some 5.25 million people and represents 18% of the Philippines' work force

(Philippine Retailers Association, 2010). Further explained by Aneel Karnani in the

Stanford Social Innovation Review (2007), in developing countries, micro enterprises

comprise the vast majority of the small business sector which is a result of the relative

lack of formal jobs available for the poor. Micro enterprises in developing countries,

then, tend to be the most frequent form and size of a typical business. In addition, the

retail industry in Philippine setting provides excellent business opportunities such as a

huge market for an alternative source of income found in small stores or more locally

known as “sari-sari” stores. (MCA Limited, March 2012). Most micro enterprises are a

convenient source of secondary income for low income families in the Philippines who

invest their earnings step by step to grow a business (Miraflores, 2012). Thus,

entrepreneurship is indeed essential to the livelihood of most Filipinos such as small

stores, vegetable stands, mini-groceries, backyard piggery and mini-food stands and the

like are forms of microenterprises established by most Filipinos in every community

(Haresco, 2010).

Micro enterprises such as small stores and commercial rentals are convenient to

customers and store owners alike since it has been around to provide income for

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countless small proprietors, thus it is a business worth considering for a gradual

entrepreneurship venture (“How feasible are sari-sari store”, 2008).

Today, the leader in the retail industry in the Philippines, SM Supermalls, was

actually started by a humble beginning by its pioneer, Henry Sy, by selling shoes to the

impoverished Filipinos after World War II (Poarch, 2007). SM Supermalls, a subsidiary

of SM Prime Holdings, is now the Philippines' largest mall operator which is publicly

listed since 1994. It now owns and runs world-class malls all over the country, providing

millions of square meters of floor area for a fully integrated shopping, dining, and

entertainment experience (Dumlao, 2012).

The second largest mall developer in the country with 29 shopping malls in the

country is Robinsons Land Corporation (Philippine Stock Exchange, 2012). As of 2012

Robinsons Land Corp (RLC) has opened three new malls located in Pangasinan,

Palawan, and Magnolia and expanded two of its existing branches in Tacloban and

Bacolod to boost its steadily growing chain of commercial centers (De la Peña, 2012).

Mall establishments continue their unhampered expansion especially in the

provinces, however the small business owners or micro entrepreneurs especially the wet

market or “palengke” that thrive in the many provinces have also raised their

apprehensions (Ombion & Lachica, 2007). Also, according to an interview with Buñag,

commissioner of the Bureau of Internal Revenue in the year 2007, as stated in the article

of Ombion and Lachica, taxes that would be generated by the income of the malls are

mostly directed to national government and have little to do in helping the local

government income. Also, he further said that there might be a possibility that local

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merchants would be affected, citing a similar case in the US where local businesses in

some areas collapsed with the opening of the big malls.

Among many of parts of the country where the malls relentlessly expand, the city

of Dasmariñas also had an establishment of a mall when Robinsons opened its 13 th mall

in 2003 and SM opened its 18th mall in the same area in Pala-Pala in 2004 (Dela Peña,

2004). SM also constructed a pilot project of testing a smaller shopping mall in the area

of Dasmariñas city public market (Dumlao, 2011). Also in the article of Dumlao (2011)

Jeffrey Lim, the executive vice president and finance officer of SM Prime Holdings Inc

explained that the move may also pave the way for more partnerships with local

government units (LGUs) on sprucing up public markets into more robust retail centers.

However, according to the CALABARZON assessment of Lacap in 2008, despite the

advantages of opportunity for economic growth, more employment opportunities and

reduction of the sight of poverty, it can be appalling that the malls also have a lot of

disadvantages such as increasing level of poverty for small business owners who have

lost their livelihood through the malls, employment inequality because of the requirement

for more daily wage and contractual sales workers who are exploited with the longer

work hours, and threat to the survival of the locally thriving small and medium

enterprises by the micro entrepreneurs in the local community.

Thus the researchers of the study would like to investigate the effect of mall

establishments to the profit of micro enterprises in Dasmariñas City, Cavite.

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Background of the Study

  Cavite is one of the provinces in Region 4-A that occupies a land area of 1,427.06

sq km (550.99 sq mi) which is approximately 8.72 percent of CALABARZON’s total

land area, 2.74 percent of the regional area and 0.48 per cent of the total land area of the

Philippines which indicates that it is the smallest. Despite the fact that it is the smallest

province in the CALABARZON region, it is one of the richest provinces when it comes

to industrial businesses (Provincial Government of Cavite, 2009). Under the province of

Cavite is the City of Dasmariñas, which is the focus of this study.

The study centers in Dasmariñas, Cavite, where most businesses are located. It is

one of the fastest growing cities in the province of Cavite (National Statistics Office,

2007) and due to its fast economic development, Dasmariñas, from a municipality, was

converted into a city on November 26, 2009. The arrival of industries, academia, and real

estate developments gives a big impact in the conversion of Dasmariñas into a city. Since

1990s, Dasmariñas served as a catalyst for major economic development and sustained

growth for Metro Manila urban area (City Government of Dasmariñas, 2010).

In fact, Dasmariñas, prior to its conversion into a city, is the only municipality in

the Philippines that had both SM and Robinsons Mall located in one baranggay. At

present, the city of Dasmariñas continues to be one of the contributors of economic growth

through establishing businesses that give opportunities to the local people of Dasmariñas

who are unemployed. One proof that Dasmariñas had contributed in the wellness of the

economy is the First Cavite Industrial Estate (FCIE). FCIE is an industrial subdivision

located in Dasmariñas City that caters the basic needs of manufacturing concerns.

According to Highbeam Research Inc. (2009) the city has 81 foreign and domestic

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corporations employing 20,000 employees. Located also in this city is the prestigious

University of De La Salle University that has a student population of approximately

15,000.

Different types of businesses and micro enterprises, not just in Dasmariñas but in

the Philippines as a whole and from small to large enterprise, are in developing numbers.

Numerous commercial establishments such as shopping malls, convenient stores,

restaurants, and the like are diversified in the city. The primary reason behind this is the

increasing demand from consumers (Philippine Retailers Association, 2010).

Establishment of shopping malls is also in high demand for business entrepreneurs.

Entrepreneurs are eager to expand their businesses and diversify them in different areas

considering that in the Philippines, we need more entrepreneurs who will strongly promote

capital, create more wealth, and provide more employment in our country (Abrogar,

2011).

Cavite is one of the provinces affected by this expansion of shopping malls,

specifically, the city of Dasmariñas. Shopping malls offer variety of services and products.

It offers entertainment, dining the products and services convenient to consumers. On the

other hand, micro enterprises, in this study, refer to those businesses that are small in

nature and mostly, privately owned (Mills, 2009). Typically, in the Philippine community

and cultural setting, those micro enterprises provide various and different types of

products such as sari-sari stores, mini grocery stores, smaller food restaurants, mini food

stands, corner boutiques, backyard piggery and other types of micro businesses (Haresco,

2007).

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The most popular type of small business or micro business in any region and local

baranggay in the Philippines is the “sari-sari” store (Malapit, 2007). There is no clear

history of how the sari-sari store emerged, although Silverio (1982) as quoted in Malapit

(2007) suggests that the sari-sari store dates back to the Sung dynasty period when

Philippine-Chinese trade began. Other accounts confirm the establishment of Chinese

agent stores during the Spanish period (Wickberg, 1962). Despite excess competition,

price markups remain high (Chen, 1997), and sari-sari stores continue to grow, accounting

for 90 percent of the country’s total retail outlets (Olarte & Chua, 2005). Added to this

competition are the malls that according to Balgos (2002) cited in Lacap (2008) that their

huge establishments to a locality create the slow and sure death of a city’s public market,

the “palengke” and small store owner and vendors losing their stalls and means of

livelihood. Thus, the researchers found a need to determine in the city of Dasmariñas the

effect of the establishment of malls to the profit and livelihood of the small business

owners that were initially thriving in the localities before the malls penetrated the rural

and urban communities of the city.

Statement of the Problems

Several studies were made by different researchers in different areas of the

Philippines. This study, however, differs from those in the sense that it focuses only in

Dasmariñas City, thus, existing research would be made narrower by limiting its focus of

study. Also, other researches focus on the effects of malls on small enterprises in a broad

set, while this study will focus more on the profitability view.

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A shopping mall, shopping centre, shopping arcade, shopping precinct or simply

mall is one or more buildings forming various shops representing merchandisers, with

interconnecting walkways enabling visitors to easily walk from unit to another, along with

a parking area which provides a modern, indoor version of the traditional marketplace

(Derry, 2009). Micro enterprises, however, are those small businesses that employ small

number of employees. According to the European Union in 2003 a microenterprise will

usually operate with fewer than 10 people and is started with a small amount of capital yet

still a category of small enterprises particularly important for the development of

entrepreneurship and job creation.

Most microenterprises specialize in providing goods or services for their local

areas. Some of the noticeable differences of the two are – size of firms, number of

workforce, and amount of invested capital. This study will explain those differences and

how are the two affected by those. This study will also explain why micro enterprises still

exist despite the existence of malls. Many branches of malls exist in the different parts of

the Philippines and Dasmariñas city malls and micro enterprises are also developing in

numbers.

Generally, this study aims to enumerate the effects of shopping malls to

profitability of micro enterprises within the scope of this study. However, the scope of this

study is not limited to such effects because researchers, through this study, will also

include relevant information regarding other important matters of discussion such as the

survival strategies of micro enterprises, their competitive strategies, and the like.

Specifically, this study aims to give answer to the following questions:

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1. What are the profit, inventory stock and condition of the micro enterprises in a

locality before the establishment of the malls?

2. What are the profit, inventory stock and condition of the micro enterprises in a

locality after the establishment of the malls?

3. What are the consumers’ preferences that affect the profit of the micro

enterprises in the establishment of the malls?

4. What are the survival strategies of micro-entrepreneurs in the presence of malls

in the local community?

5. What are the livelihood training programs and other projects provided by the

local government in order to help micro entrepreneurs from losing their source

of income?

6. What is the importance of micro enterprises to the local community and can the

local government sustain the micro enterprises despite the establishment of big

malls?

Objectives of the study

Generally, this study aims to determine the effects of mall establishments on the

profitability of micro enterprises. Specifically, this study attempts:

1. To determine the type of micro enterprises that the target respondents are engaged

in and the years of existence of the micro enterprise in the locality.

2. To get a stock estimate of the purchases of the store every year before the

establishment of the malls that will provide an inventory estimate.

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3. To get a stock estimate of the purchases of the store every year after the

establishment of the malls that will provide an inventory estimate.

4. To know the changes relative to its sales and profitability after the establishment

of the mall.

5. To determine how micro enterprises the employ techniques and strategies to

improve declining profit because of mall establishments.

6. To enumerate the strategies that small enterprises implement for their survival.

7. To know the efforts of the local government on sustaining the micro enterprise

livelihood of the local micro entrepreneurs affected by the mall establishments.

Hypotheses of the study

Miraflores (2012) articulated that sari-sari stores allow easy access to basic

commodities at low costs. Further elaborated by Malapit (2007) that any essential

household good that might be missing from one’s pantry –from basic food items like

coffee and margarine, to other necessities like mosquito coils, soap and matches – is most

conveniently purchased from the sari-sari store nearby at affordably portioned quantities,

sometimes even on credit. Apart from the most affluent communities, the sari-sari store

is a constant feature of residential neighborhoods in the Philippines both in rural and

urban areas, proliferating even in the poorest squatter communities. While for the

establishment of malls, Lewis (1994) stated that malls are convenient places to shop

because of its aspect which is its one stop shopping experience. And due to invasion of

the malls in a certain baranggay or locality, the livelihood generated by the micro

enterprise from the local residents is threatened (Ombion, 2007)

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H1: The establishment of malls in the city of Dasmariñas is a threat to survival of

the businesses established by local micro enterprises.

Small businesses often operate in environments where capital is scarce and where

knowledge of best-management practice is limited (Mehta, 2010). Nevertheless, this

view ignores that the SME sector across Asia includes a rich array of entrepreneurs who

survive despite business environments that are often hostile to their business interests.

But it is a sad fact that in the business community, the poor majority such as micro

enterprises and small business is sometimes referred to as the bottom of the pyramid,

which was generally ignored when corporate planners craft marketing programs to

generate revenues and profits (Villar, 2012).

H2: The owner of micro enterprises in the city of Dasmariñas are ignored because

of the establishment of larger establishments such as malls that make the façade

of their locality more urbanized and richer, when in fact more local residents that

could not cope with finding a better livelihood when their former micro enterprise

become unprofitable actually create more poor residents of the locality.

Haresco (2010) also stated in an article that having small businesses is a matter of

survival for small entrepreneurs. They rely on these means of income to put food on their

table and provide for their other necessities thus if the profits of the business cannot

sustain the business they have to close shop and together with it they lose as source of

income to sustain their families.

H3: The micro enterprises established in the city of Dasmariñas before the malls

invaded the city must be the priority for help by the government officials because many

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local residents who own their micro enterprises as primary source of income are the ones

extremely affected because of the lost of profit caused by a nearby mall.

Added to this competition are the malls, that according to Balgos (2002) cited in Lacap

(2008) create the slow and sure death of a city’s public market, the “palengke” and small

store owner and vendors losing their stalls and means of livelihood.

H4: The profit of micro enterprises will decline due to the establishment of malls

to the locality where the micro enterprises are established.

This is because of the increased patronization of both out-shopping (in other

words, the extent of shopping outside one’s own township) and purchases from small

township businesses have been displaced in favor of shops located in newly established

shopping malls (Ligthelm, 2007). Thus this means that the customers of the local stores

are stolen by the behemoth malls thus removing profit from the stores which could be

compared to the United States where Walmart as a big mall establishment invade a

locality and negatively affect the commercial viability of nearby small retail

establishments and thus eventually are forced to close shop for lack of profit when their

customer base declines since they are already outcompeted by the big malls (Renkow,

2005).

H5: The micro enterprises in the city of Dasmariñas will lose their local or

community customers and their profit associated to these customers over the mall

establishments.