Posts Tagged ‘Lamac Multi Purpose Cooperative’

Financing:Unique Hapinoy convenient store

September 22, 2009

Unique Hapinoy convenient store

If micro-financing has to create an impact in rural poverty, innovation must set itself in it.

That’s exactly what MicroVentures Inc. has started to do—do something nobody-else has done before.

In partnership with micro-financing institutions, primarily the Center for Agriculture and Rural Development-Mutually Reinforcing Institutions (CARD-MRI), it has been putting in big value to sari-sari stores, known to be the smallest retail unit in the Philippines.

Its creation? The “Hapinoy” franchise of sari-sari stores in rural areas that are now in Laguna, Batangas, Quezon, Caloocan, and Mindoro.

Small as these may be, the sari-sari stores are growing to be more managed, offering more affordable products to the poor, and creating a multiplier impact in the outskirts out of being a more prestigious “branded” market for Filipino-made products.

They are one-of-a kind now, the first in the Philippines, and maybe an innovation even on a global scale.

Who has seen 40,000 small stores getting the same look and receiving a systematic, franchise-like management at the micro-level?

“They also have village stores in India and Vietnam. But these stores are not consolidated (in a systematic way, so) we may even be the first in the world,” said MicroVentures Inc. President Paolo Benigno “Bam” A. Aquino IV.

Hapinoy member-stores get the advantage of cheaper purchases, maybe five percent lower, than the amount where they previously get their goods from.

Through MicroVenture’s aid of getting the goods directly from manufacturers, Hapinoy members get discounts that give them lower cost and higher margin. They can even pass on the discount to consumers.

MicroVentures, in turn, earn a portion from the sale of the goods.

Its other income stream is the services it offers to its partner-manufacturers.

Among the member-suppliers are Unilever (Surf, Sunsilk, Creamsilk), Colgate-Palmolive, Universal Robina Corp., Marca Pina, Monde Nissin (Lucky Me noodles, Skyflakes), Rebisco, Century Pacific ( Argentina , Century Tuna, 555), Nestle (Nescafe, Coffeemate), and Oishi.

Jeannie Trinidad-Bagutua, 36, a Nursing undergraduate, has already been borrowing from CARD-MRI for about two years until MicroVentures came in for more assistance in July 2007.

She started with a loan of P5,000 with CARD-MRI which was payable over six months. She was later able to borrow P40,000 upon her prompt debt payment.

Later on, since July 2006, the CARD-MRI-MicroVentures partnership has proven to be a more powerful synergy in micro-financing as Hapinoy store-owners got trained on more professional business managing.

“I learned things like inventory management. I used to just go to grocery stores, and buy anything I wished. With Hapinoy, we were advised to increase stock of fast-moving goods and refrain from stocking up slower-moving goods,” said Jeannie in Filipino.

Under the Sari-sari Skwela, each lead store owner is taught pricing, business expansion, and goal setting.

“We are asked to have a goal on the income we want to reach. If we don’t reach that, what could be the reasons for the failure?”

Without some form of training, it would have been less likely that Jeannie could really grow to become a “lead” store-owner that she now is. As a lead store owner, she supplies goods to other smaller sari-sari stores totaling now to 100.

Her sales has grown by about 10 times and has started to peak to P20,000 to P30,000 daily. From the 1.5 x 3-meter store that she ran prior to MicroVentures’ entry, her store has expanded to 10 x 2-meter plus her living room, measuring 8 x 4-meter has been transformed into a store too.

This has become possible as she got a credit line from CARD-MRI, Microventures, main microfinance partner and recent Ramon Magsaysay awardee, totaling to P250,000, enough to make her leap faster in her business.

A major supply partnership MicroVentures entered into was with Smart. A Nokia handset can be paid by a Hapinoy store-owner over six months, while cellphone load loans are paid weekly.

Interestingly, lead store owners do not compete with their member sari-sari stores even if lead stores can sell at retail to any customer. However, a lead store head has to sell goods at a price not lower than her member-stores’ price in order to also protect members’ sales.

Aquino said MicroVentures has been able to extend business management and training services to Hapinoy’s lead store owners with the combination of the experience and expertise of the company’s leaders.

Its managing director, Mark Joaquin Ruiz, is chairman of Rags2Riches Inc., co-founder of WhyNot?Forum, and is associated with the Creative Industry Initiative and Kolektib, a Filipino innovation-collaboration group.

Rafael Lopa, chairman of Microventures, Inc., is also executive director of the Benigno S. Aquino, Jr. Foundation executive assistant to former President Corazon C. Aquino, and Pulse Asia Inc. president.

Manny de Luna, one of MicroVentures board members, was country customer and activation manager of Unilever, was senior officer of multinational companies like Coca Cola, Nestle, and Colgate-Palmolive, and is founder and president of marketing specialist ActivAsia Inc.

The company’s vice chairman, Dr. Jaime Aristotle B. Alip, founding president and managing director of CARD-MRI, has given directions to succeed in a field where only those who are dedicated to working with the less-privileged families have ventured.

CARD-MRI is Philippines’ largest microfinance institution and has 770,000-family membership. It has focused on helping sari-sari stores which take up 20 percent of its loan.

The company is really a collaborative effort.

“We have schools and students, volunteers who help us out with different things, ranging from doing our website to our trainings. We believe in open-source. More partners plugged in to the Hapinoy network with the same goal of nation-building,” he said.

Aquino himself is a World Economic Forum-recognized Young Global Leader, ABS-CBN’s “Start-Up” host, and former National Youth Commission chairman.

“It’s not easy. But we help many people in the process,” Aquino said.

The company has mustered financial resources by combining its own board’s investment and loan from CARD-MRI. This makes the venture “asset-light.” or less capital-intensive.

Aside from CARD-MRI, its micro-financing partners are the Taytay sa Kauswagan (with 207,210 clients operating in 490 towns; loan portfolio P864 million; 2005 Ulirang Kabalikat awardee); and Kasagana-Ka.

Another partner-MFI, the Lamac Multi Purpose Cooperative began as a “Samahang Nayon” in 1973, is composed of tenant tillers and small farm-owners, and now has 20,000 members in Carcar, Bogo, Oslob, and Mandaue.

The business strategy combines a host of value-added professional management systems.

These are merchandise consolidation– product sourcing directly from suppliers; branding—the Hapinoy brand lures customers to a “convenient” type of store that offers lower-priced goods; and skills upgrading of lead store owners.

“MicroVentures aims to be the preferred ‘Business Partner of the Poor. ’While big businesses see the so-called ‘bottom of the pyramid’ as a huge market opportunity, we believe this socio-economic segment is creating markets for new business,” according to a company primer.

From just 1,000 stores at its initial sites, the company’s target is to put up 100,000 by 2009.

From the nine lead stores at present, the target is to raise this to 80 lead stores nationwide specially in Cebu, Panay Island, and Mindanao provinces.

There are around 650,000 sari-sari stores all over the Philippines.

Consolidating their functions and resources will bring about increased income out of reduced costs for micro-entrepreneurs, empower women who are the target of these MFIs, and create livelihood in the countryside.

The newly-acquired business management skills of formerly mere “nanay’s” pass on to the children and youth.

Access to wireless communication likewise enhances rural people’s access to information.

The Hapinoy stores also become trading agents for Filipino-made processed agricultural goods.

These also become a promoter of social consciousness with the centers becoming “announcement” centers for local events and seminars through a bulletin board installed on the stores.

“Community centers,” prominent locations with computers and needed facilities for Hapinoy members’ enhanced learning and communication, are also now being put up.

“We’re in a talk with a large (computer) company who’s already setting up the system. The idea is to have each lead store have this community center,” he said.

Because of its evident success, big commercial banks have started talking with the company on potential partnership. As the amount of the loans of the stores are getting bigger, banks are seeing profitability prospects from Hapinoy.

“If we are successful, the Hapinoy members can eventually ‘graduate’ to (borrowing from) commercial banks. So the success of the micro enterprises in Hapinoy is for their benefit as well. We are already in talks with some banks for our training program,” said Aquino.

In the first place, MicroVentures is becoming successful because it saw this profit factor as secondary to helping small entrepreneurs become successful.

“Its a social business enterprise model. Our company subscribes to the double bottomline value — social impact and sustainability,” he said.

It is inspiring a good sum of nation-loving people.

“A number of individuals have come to us and said that they also want to put up social enterprises. We hope to pave the way for more companies such as ours. We believe in the transforming capacity of the social enterprise and how it can help in the fight against poverty.”