Academic journal article Journal of Small Business Management

The Sari-Sari Store: Informal Retailing in the Philippines

Academic journal article Journal of Small Business Management

The Sari-Sari Store: Informal Retailing in the Philippines

Article excerpt

The pattern of development in Third World countries has resulted in a splitting of the labor force. One portion works in the formal, structured sector of the urban economy which is characterized by high wages, relatively good working conditions, job security, and an opportunity for advancement; the other portion works in the unstructured, informal sector with relatively low wages, poor working conditions, high variability in employment, and little opportunity for advancement.

The Philippine economy offers little exception to this pattern. The magnitude of economic crisis that is confronting the country today has led to an increased role played by the informal sector, which appears to function basically as a coping mechanism. Referring to those working in this sector, Gatchalian et al. (1986) state:

Their income generating activities enable them to subsist in an economy which can virtually no longer support them.... They respond directly to the needs of those who make up the large impoverished sector of the urban society... In effect, though highly informal, they have an efficient, inexpensive network of commerce and trade for the urban poor (p. 22).

The Philippine informal sector is characterized by a large number of small-scale production and service activities that are individually or family-owned and use labor-intensive and simple technology. The self-employed workers in this sector have little formal education, are generally unskilled, and lack capital resources. As a result, worker productivity and income tend to be lower in the informal sector than in the formal sector. Moreover, workers in the informal sector do not enjoy the measure of protection afforded in the formal sector in terms of job security, decent working conditions, and old-age pensions. Most workers entering this sector are recent migrants from rural areas unable to find employment in the formal sector. Their motivation is usually to obtain sufficient income for survival purposes rather than to achieve any great profit, relying on their own indigenous resources to create work. As many members of the household as possible are involved in income-generating activities, including women and children, and they often work very long hours. Most inhabit shacks they themselves have built in slums and squatter settlements, which generally lack minimal public services such as electricity, water, drainage, transportation, and educational and health services (Farolan 1995). Against this backdrop, a coping mechanism know as the sari-sari store has evolved.

The Sari-Sari Store

In textbook parlance, the sari-sari store is a retailing operation, In the Philippine situation, however, customers perceive it as the primary source of consumer items in exactly the needed amounts. Sari-sari stores cluster in the interior parts of the metropolis to provide goods for their urban poor customers. Typically the store is operated from a portion of the owner's house dedicated to that purpose. The average size of a store is two by four meters. Crammed into this area are the display, stock room, and a small work place that also serves as an office. Transactions take place through a wide window, with the customer staying outside the store. Some stores add a carinderia, or small restaurant, to their sari-sari store.


In a preliminary effort to investigate the characteristics of sari-sari stores, sampling approaches were applied to these stores in metro Manila. The sampling frame included the areas of the city which were busiest in terms of underground employment. The sampling units were randomly-selected persons engaged in operating a sari-sari store in these areas. Allocations of number of respondents to be selected per chosen area were based on the area's population.


Bustling trade and manufacturing activities in the formal sector serve to attract "squatter" businesses that ply their sari-sari store wares on these sites. …

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