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In low-margin, high-volume trade, Pinoy hardware store rules

In low-margin, high-volume trade, Pinoy hardware store rules

By Tina Arceo-Dumlao
Philippine Daily Inquirer
First Posted 18:17:00 12/18/2010

MANILA, Philippines?There is a reason why the Chinese in the Philippines have become synonymous with the indispensable hardware sector, and that is the simple, undeniable fact that the intrepid, diligent and persevering Filipino-Chinese entrepreneurs do own the majority of hardware stores all over the country.

But there is one Filipino-run company that has managed to hold its own against the Chinese-run establishments: Fil-American Hardware Co. Inc., which is celebrating its 55th year in the low-margin, high-volume business.

Fil-American chairman and president John Bautista tells the Inquirer that the Filipino company?like its Chinese counterparts?started as a small, one-story shophouse on Rizal Avenue, Blumentritt, Manila, that relied almost exclusively on walk-in customers searching for the usual paint, wood and nails to complete their house construction or renovation.

It was put up by his parents, Demetrio and Leonila, who were in turn inspired by Demetrio?s parents who had operated a grocery in Peñaranda, Nueva Ecija.

?When my parents managed to earn enough capital, they started their own business in 1955 with P10,000. I was still a grade-school student then at Espiritu Santo,? Bautista says.

In 1972, Bautista joined his parents in running the hardware. But he had his own ideas on how to expand its operations, and one of the most significant steps he took was to approach contractors and corporations that may want hardware products.

?I started going for the corporate accounts. I believed then that we could not just wait for the customers to come in, we had to solicit sales ourselves,? he explains.

The tactic literally paid dividends for Fil-American, such that sales from corporate accounts today account for 70 percent of sales, with the rest coming from retail, walk-in customers.

But Bautista stresses that his parents? values of providing the best service and price to customers remain part of the genes of Fil-American, which now has two branches, in Quezon City and in Alabang.

He says living true to these values enabled Fil-American to compete in the crowded marketplace. But then again, the market is big enough to accommodate a whole slew of hardware stores.

As Bautista says, everybody needs a dwelling place.

What they put into that dwelling place, however, has changed significantly over the years.

Bautista notes that during the early years of Fil-American Hardware, the most popular items were wood products as houses then used a lot of wood. Five decades later, hardwood has given way to composite wood imported from Malaysia, gypsum boards and more steel and glass items.

Houses are also losing their popularity because of the proliferation of much smaller condominium units that demand more specialized materials such as aluminum, ceramic tiles, plastic fabricated material and decorative paint.

Also influencing the change in construction taste is the growing desire among Filipinos to lead a more environment-friendly lifestyle.

According to Bautista, there is growing demand these days for lead-free paint, low-watt light bulbs and solar panels.

Power tools?especially the battery-operated drills?are also selling well because many homeowners now want to do their own home projects instead of paying somebody else to do them.

?There was a time when only a contractor had a power tool. Not anymore,? Bautista says.

To keep up with trends, Bautista says he and his children?who now take care of 70 percent of business operations?make it a point to regularly go to trade shows here and abroad.

Growth in demand for construction supplies plus competitive prices and wide variety of products combined to make 2010 a very good year for Fil-American Hardware.

The third-generation Bautistas, led by COO Mia Bautista-Peneyra, are looking forward to an even better 2011.

This year has been fairly good for us with sales growing by 15-20 percent,? he says. ?With the new administration, the economy has been doing well and we are looking forward to a few more years of growth.