Bringing the Philippines’ beloved mom-and-pop stores into the 21st century

At Madel Baraquia’s corner shop in Rizal province near Manila, the prices of items are handwritten, and customer accounts scribbled in a notebook. But beside the steel cash box is a decidedly modern gadget: a Bluetooth barcode scanner to track inventory. It has revolutionized her business, she said.

Five years ago, Baraquia signed up for the digital inventory system from local startup Packworks. The software was free — all she had to do was buy a basic tablet, a barcode scanner, and a receipt printer, the 60-year-old told Rest of World . “The app has been a big help. I can easily check the items in my store and know when to order more,” she said.

There are over 1.3 million mom-and-pop stores like that of Baraquia, accounting for nearly 70% of the manufactured goods sold in the Philippines. Locally known as sari-sari — meaning “variety” in Tagalog — they sell basic household necessities, and also offer mobile top-ups and utility payments. Several local startups and the Philippines government are now helping bring these stores to the 21st century by digitizing their inventory management, bookkeeping, and logistics.

“We want to give them a fighting chance in a digital world,” Trade Undersecretary Ed Sunico told Rest of World . “We are optimistic they will embrace it because the pandemic forced them to look at digital trading and selling. We just need to speed it up more.”

Sari-sari stores have an outsize presence in the Philippine retail industry, helping drive its growth to reach $286 billion by 2027, according to consulting firm Kearney. Often run by women, they cater largely to low- and middle-class consumers, selling goods in micro packs — colloquially known as tingi — at lower prices compared to supermarkets, Janelle Faye Tanudtanud, a researcher at the University of the Philippines Institute for Small-Scale Industries, told Rest of World .

In rural areas, the stores double up as community centers for locals. “Sari-sari stores are deep-rooted in Filipino culture because of the convenience of access, but they also have community and social aspects,” Tanudtanud said. “Sari-sari store owners are usually our neighbors and friends whom we can easily ask for favors or even credit.”

Despite the expansion of e-commerce and modern retail, sari-sari shops had sales of about 8 billion Philippine pesos ($136 million) in 2023, an increase of around 20% from the previous year, estimated Packworks. Some of that gain came from digitization, Packworks’ co-founder, Ibba Bernardo, told Rest of World .

Bernardo and his co-founders hatched the idea for Packworks in their previous gig delivering solar panels in rural areas. No matter how remote the location, there would be a sari-sari store. “There is no running water, no electricity, but there’s a sari-sari store serving the community,” he said. “They have so many challenges … We wanted to make a lot of money for the nanays [mothers].”

From about 5,000 sari-sari stores using Packworks software in 2018, now around 300,000 stores use its digital inventory and point-of-sale systems, Bernardo told Rest of World . “Sari-sari stores are the easiest business to set up but the hardest to be successful in. We saw the chance to help them amplify their operations through a one-stop software … to increase their sales, their revenue,” he said.

Philippine startups Growsari and Peddlr link sari-sari store owners with major brands like Unilever and Nestle, so they can buy products at wholesale prices. Having a digital record of financial transactions also helps the stores get funding, Nel Laygo, co-founder and chief executive of Peddlr, told Rest of World . The stores were “neglected by the financial ecosystem because it's riskier without proof of income and revenue streams,” said Laygo, who set up Peddlr during the pandemic. Digitization of the data helps them “easily access capital.”

The Philippine Department of Trade and Industry recently introduced the Sari-Sari Store Advancement Program, with online learning for owners on digitization and social media marketing. Packworks is a partner in the program, along with telcos Globe and Smart. The 90-minute webinars stream on Facebook once a month from June to October. “If the sari-sari stores are given the tools and knowledge on the available digital solutions, they might have the chance to elevate their business,” Sunico said.

Worldwide, corner shops make up a business worth more than $900 billion , estimated venture capital firm Flourish Ventures. Most have paper-based accounting systems that lead to inefficiencies. Digital-led business tools can improve store profitability by 60%–100% or more, it said.

In Indonesia, for example, there are about 3.5 million convenience stores, known as warungs , which account for more than 70% of the retail market. The opportunity to digitize them has lured local startups such as payment service firms Toko Pandai and Warung Pintar, as well as e-commerce giant Bukalapak, and GoToko, a joint venture between GoTo and Unilever.

While the opportunity is huge, there are several challenges to digitizing sari-sari stores in the Philippines.

Internet access and speed in the country are poor, particularly in rural areas, with the cost of going online also a barrier, according to the World Bank . Syncing inventory can take hours on a patchy internet connection, and sometimes digital payments do not register in real time. Owners also struggle to apply for government financial assistance online, Melanie Cabotaje, a researcher at the University of the Philippines Institute for Small-Scale Industries, told Rest of World .

“Before we fully shift to digital technology, everyone must have access to cheaper and reliable internet,” Cabotaje said.

Other barriers include the initial investment and the steep learning curve. Shopkeepers are hesitant to embrace new technologies, said Laygo. “Some of the merchants were really afraid to put their business information on an app that they haven’t heard of,” he said. “So we created a community on Facebook where we were able to have dialogues with them.” The group now has nearly 200,000 members who share their experiences with the Peddlr app and flag issues, Laygo said.

For Jason Endaya, who runs a sari-sari shop in Navotas, a fishing community north of Manila, investing in technology has paid off. After inheriting the store from his elderly mother, he spent around 9,000 Philippine pesos ($152) of his savings on the Packworks system in 2019, he told Rest of World . The returns were quick. “There is less room for error in sales, and we are more organized with our inventory, unlike when we relied more or less on guesswork,” he said, as customers streamed into the shop to buy cans of sardines and infant formula.

Endaya, 37, soon bought three more tablets, scanners, and receipt printers. He said his average daily sales reached 180,000 Philippine pesos ($3,060), more than double the revenue before the system. “Without this technology, our store probably wouldn’t grow like it did,” said Endaya. “There was just too much stress and effort in doing everything manually.” ▰

Jhesset O. Enano is an independent multimedia journalist in Manila.