Retailers see modest growth amid rising costs, online rivals

August 7, 2026

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Philippine retailers are bracing for another challenging year, with industry growth expected to remain in the single digits as higher operating costs, cautious consumers, and intensifying competition from online sellers continue to squeeze margins, according to the Philippine Retailers Association (PRA).
Speaking on the sidelines of the National Retail Conference and Exhibition on Thursday, PRA President Alice Liu said retailers remain cautiously optimistic despite an increasingly complex operating environment shaped by geopolitical tensions and persistent cost pressures.
“As an industry, probably a single-digit growth. But there will always be outliers that will grow double-digit,” Liu said.
“Business is really all about people and how you manage your business.”
While consumer spending has remained resilient, Liu said profitability has become more difficult to sustain as businesses absorb higher labor costs, rising rents, and more expensive utilities.
“The top line is easy to grow if you give away margins, but that’s not a sustainable way to grow your business,” she said, noting that retailers are balancing promotional activities with the need to protect earnings.
The comments reflect a broader shift in the retail landscape, where success is increasingly measured by operational efficiency rather than sales growth alone. As consumers become more price-conscious, retailers are under pressure to manage costs without sacrificing customer experience.
The PRA also renewed its call for closer consultation with the government on wage adjustments, emphasizing that the retail sector employs roughly 18 percent of the Philippine workforce.
“We are not against wage adjustments because we recognize the rising cost of living. But there has to be dialogue on what is the right amount. We don’t want businesses to end up shedding jobs just to survive,” Liu said.
Another growing concern is the rapid expansion of online grey-market sellers, which Liu said now account for part of the e-commerce market while competing directly with legitimate retailers that comply with tax and regulatory requirements.
She estimated e-commerce now represents more than 20 percent of total retail sales and is expected to continue expanding.
“We’re only asking government to level the playing field. Legitimate retailers pay taxes, provide employment and comply with regulations. Many grey-market sellers benefit from our economy but do not contribute in the same way,” Liu said.
For the industry, the challenge is no longer simply adapting to digital commerce but ensuring that growth takes place under a fair and consistent regulatory framework that allows both physical and online retailers to compete on equal terms.