What Ever Happened to Makro, One of the First 'Big Box' Stores in the Philippines?

Today the concept of big box, warehouse-type supermarkets in the Philippines is dominated by just two names: S&R and Landers. S&R, which is owned by Cosco Capital of billionaire Lucio Co (the same group that owns Puregold), had 22 branches as of the end of 2021, while Landers Superstore, which is owned by the family of entrepreneur Luis Yu, who also founded the mass housing development company 8990 holdings, has seven branches as of August 2022. 

But before these big names, one major player in the big-box supermarket business was a company called Makro. For a time, it was a familiar name not just for wholesale shoppers, but also for regular folks for its giant stores with its name in big pink letters in many areas around Metro Manila and elsewhere in the country.

What ever happened to Makro?

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History of Makro

Makro is a unit of a company called SHV Holdings, one of the largest privately held companies in the Netherlands. Founded by the Fentener van Vlissengen family together with eight other families in Utrecht in 1896, SHV stands for Steenkolen Handels-Vereeniging (or Coal Trading Association) and has interests in oil and gas exploration, private equity, liquified petroleum gas, recycling materials and products, and wholesale foods and consumer goods. 

Throughout its history, SHV dipped its toes in many different businesses and industries, including mining, shipping, and electronics, but its entry into wholesale, cash-and-carry-type stores began in 1968 when it entered into a partnership with Germany’s Metro supermarket group to open the first Makro branch in Amsterdam.

Makro was inspired by the American concept of big, warehouse-type self-service stores, and it proved to be a success; it quickly expanded not just in the Netherlands but throughout Europe in the 1970s.

In the 1980s, Makro started opening up branches in the United States, although by 1988, SHV sold 51 percent of Makro Inc to the Kmart Corp. SHV then looked elsewhere in the world to expand the Makro concept, specifically to Africa and Asia.

In 1996, Makro opened its first branch in China in the city of Guangzhou. It was also the year when it made its way to Manila, opening the first Makro branch in Cainta, Rizal in March of that year. By that time, Makro already had around 150 stores in 20 countries worldwide, including stores in Asian countries like Thailand, Taiwan, Indonesia, and Korea.

Pilipinas Makro, the local operator of the concept store in the Philippines, was originally a partnership between SHV and the Sy family’s SM Investments, with each owning 36 percent, as well as the Ayala family’s Ayala Land, which controlled the remaining 28 percent.

Interestingly, parent company SHV sold its Makro business in Europe one year later, in 1997, citing stiff competition in the continent, although it kept its interests in Makro branches in Asia and South America.

The Makro concept

In the beginning, Makro stores in the Philippines were open strictly for members only, and only persons or companies with valid business permits were granted membership and allowed to shop in the store. The store itself in Cainta was a sprawling warehouse that measured 12,200 square meters.

“The fundamental business concept of Makro is a volume-driven, low- cost, low-price, self-service cash-and-carry trading operation,” said Pilipinas Makro Inc president Luis Maranon to news service UPI in 1996.

Shopping in Makro was quite different back then. The store had a strict rule of not allowing anyone below 13 years old and persons under a certain height to shop. If people did happen to bring their kids with them, some stores had a room where they could leave them, and the kids could watch cartoons on TV while the parents shopped.

Makro also had a different kind of shopping cart than the ones people are used to nowadays: it looked more like a trolley that was pulled rather than pushed. Eventually, it did make traditional shopping carts available in its stores. Later on the store opened memberships to regular folks even if they didn’t own a retail business.

Watch this video taken inside a typical Makro store uploaded by a Reddit user

In 2004, the Ayala family sold its shares in Pilipinas Makro to its venture partners, saying the business was “not among its core competencies.” Then-Ayala Corp. president and chief executive officer Jaime Augusto Zobel Ayala II also said the company will “not keep businesses where it is no longer the natural owner or where its performance criteria are not met.”

But the Makro concept apparently worked, at least in the early years. By 2006, or 10 years since it first opened in the Philippines, Makro had 15 branches all over the country: Cainta, Rizal; Imus, Cavite; Novaliches and Cubao in Quezon City; Sucat, Muntinlupa; Las Piñas; North Harbor in Manila; Makati; Mandaluyong; Cebu; Davao; Pampanga; Batangas; Cagayan de Oro; and Iloilo.

According to news reports, opening a Makro store was estimated to have cost about P150 million to P200 million in the mid-2000s. 

The demise of Makro

But it seemed not all was well with the business. For example, for the year ending 2005, SM’s annual report said Pilipinas Makro reported a net loss of over P208 million against net sales of P13.6 billion.

In 2007, SM Investments Corp. took control of Makro after it increased its ownership of Pilipinas Makro Inc. to 60 percent. This increased to 100 percent after SMIC, through its subsidiary Prime Central, acquired the remaining 40 percent of Pilipinas Makro in July 2009.

According to SM, Makro briefly returned to profitability in 2008. Then-executive vice president for food retail operations Robert Kwee said the company planned to expand Makro’s revenues by reaching out to new customers, including loyal SM patrons, not just to entrepreneurs.

“We will aggressively communicate that it is now under the SM Group, making Makro more friendly and accommodating with customers,” Kwee said in SMIC’s 2008 annual report.

By 2009, SM announced its plans for its Makro stores: it began to convert them into hypermarkets—or outlets that combine a supermarket and a department store—ostensibly because “the concept of wholesale buying no longer appeals to consumers.”

The first three Makro stores that SM switched were the branches in Novaliches, Makati, and Mandaluyong. These branches were chosen because SM found the stores to be “ill-suited” for the market they were in.

According to an SM official in 2009, “the idea of getting a membership card to buy wholesale in a Makro store was no longer attractive because of the economic slowdown.” 

SM spent as much as P600 million to P900 million to convert the three Makro stores into SM Hypermarkets.

Initially, the remaining 12 branches that retained the Makro brand would undergo changes, so “inventories will be more saleable to consumers in their neighborhoods,” SM said. However, all of the Makro stores in the country had eventually been folded into the SM Supermarkets network by 2012, including the first-ever branch in Cainta, Rizal. By then, Makro had disappeared from the urban landscape and became nothing more than a memory for the many shoppers that passed through its doors during its relatively short run in the Philippines.