Financial Adviser: 5 Business Lessons Everyone Can Learn from Jun Cabochan, Founder and CEO of Pandayan Bookshop

Building a retail business requires more than finding the right products and locations. It also requires an understanding of customers, employees and the culture that holds an organization together. For Gerardo “Jun” Villacorta Cabochan Jr., these lessons began inside his family’s supermarket business and eventually shaped the way he built Pandayan Bookshop.

Cabochan grew up around CVC Supermarket, which his mother, Clarita Villacorta Cabochan, started in Grace Park, Caloocan in 1956. The family lived above the supermarket, and from a young age, Cabochan helped in the business. He later handled human resources before becoming general manager.

His interests, however, extended beyond retail. After studying Political Science and spending a few years at the University of the Philippines College of Law, Cabochan entered government service. Following the EDSA Revolution, he worked at the Commission on Audit under then chairman Teofisto Guingona Jr. When Guingona was elected to the Senate, Cabochan became his chief of staff and also served as secretary of the Senate Blue Ribbon Committee.

Cabochan eventually returned to the private sector. In 1993, with the permission of his parents, he spun off the school and office supplies section of CVC Supermarket into an independent business that became Pandayan Bookshop. From there, Pandayan expanded organically across Luzon. Today, the company has 167 stores, with most of its network concentrated outside Metro Manila.

But Pandayan’s growth is only part of Cabochan’s story. From the beginning, he was more interested in what he calls the “people side” of business than in business purely as a financial operation. That philosophy eventually developed into Kultura ng Tagumpay, Pandayan’s corporate culture built around employee development, Filipino values and the concept of kapwa.

Cabochan later expanded the family’s retail interests when he acquired Filbars, the specialty comics and collectibles retailer, more than a decade ago. The business, which his family helped turn around, is now managed largely by his sons and has expanded into collectibles and pop-up stores for brands and entertainment properties such as Pop Mart.

More than three decades after Pandayan became an independent business, Cabochan continues to guide a company whose story is as much about people as it is about retail.

How did a school and office supplies section inside a supermarket grow into a 167-store retail network? And what can entrepreneurs learn from Cabochan’s approach to employees, culture and growth?

Here are five business lessons entrepreneurs can learn from the story of Pandayan Bookshop:

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Growth does not always come from the markets that appear most attractive at first. Sometimes the best opportunities can be found in smaller communities, overlooked customer segments or locations that other businesses may consider less promising.

Entrepreneurs should therefore avoid relying solely on assumptions about where their business should succeed. The key is to test the market, observe how customers respond and learn from actual results. When a particular location or customer segment performs better than expected, entrepreneurs should understand why before deciding whether the same conditions can be found elsewhere.

This also means remaining flexible about the direction of growth. A business does not always need a grand expansion plan from the beginning. It can start small, learn from each market and expand gradually based on what works.

Cabochan was willing to test an idea before knowing whether it would work. When Pandayan became independent, he did not know whether the business would make money. Many entrepreneurs wait for certainty before making a move, but Cabochan took a different approach. He started with a relatively small experiment and allowed actual customer demand to show him what the business could become.

He followed the evidence rather than his original assumptions. Once the Baliuag branch worked, Cabochan turned one successful location into a hypothesis that could be tested elsewhere. He used Baliuag as evidence that Pandayan could also succeed in similar provincial markets.

This is how unexpected growth becomes scalable. The entrepreneur first finds an exception, then asks: What made this market work, and where else do those same conditions exist?

Pandayan expanded through adjacency rather than through a predetermined national rollout. Cabochan describes the expansion as geographical. Once the company succeeded in one area, it began seeing opportunities nearby. Bulacan led northward to Pampanga, Cagayan Valley and Ilocos.

This is a very different approach from deciding in advance that the company needs stores in every major city. Adjacent expansion lowers uncertainty. Each successful market improves the entrepreneur's understanding of the next market. The business accumulates knowledge gradually instead of repeatedly entering unfamiliar territory.

“My mother started a business in Grace Park, Caloocan City. It was called CVC Supermarket, from her initials: Clarita Villacorta Cabuchan in 1956,” he says. “So we developed that business up to about 10 to 12 stores. We had supermarkets in Caloocan, Valenzuela, Nueva Ecija and Bulacan.

“I grew up with the business because our house was on top of the supermarket. Even in our younger years, my mother would compel us to help out during summer. So we learned the business. Especially being the eldest, she focused on me. It was very Chinese, so I learned the business.

“I had the chance to run it in the 1980s. When I was in college and serious enough, I started helping out with HR. I was already working with our HR even while I was in college. Then, when I became general manager, I learned about merchandising, inventory management, and especially handling people.

“But right after the EDSA Revolution, I worked in government for a few years until 1989 when I went back to the private sector. I did some consulting work because I was president for 3 years at the Philippine Society for Quality. We did ISO 9000 and 5S and other quality management techniques, and at that time I was also active with People Management Association of the Philippines as a director for a year.

“Then, in 1993, we spun off the school and office supplies section in from the supermarket. I asked the permission of my parents to spin it off into an independent business. So a floor of the building which contained the school and office supply section was spun off and we registered it as Pandayan Bookshop.

“Pandayan is a blacksmith shop. A panday is a blacksmith. So in Pandayan, we help shape the minds and hearts of students. Our tagline is, ‘Maging kabalikat ng kabataan tungo sa kabutihan at karunungan.’ That’s our slogan.

“At that time, we just started developing the concept. When we separated it, we did not really know if it will make money. So first we focused on greeting cards. We had a large section of greeting cards, because at that time greeting cards were saleable, and we also had stationary products. We didn't have much books at that time, but mostly school and office supplies. It was on the mezzanine floor. The supermarket was on the ground floor, so it was convenient.

“It was in Grace Park, Caloocan, in the same building as CVC. The sales at that time started out maybe just P3,000 pesos a day. It was not really making money.  When our supermarket opened branches in Valenzuela and Baliuag, Bulacan, we also opened a Pandayan in each location.

“I think it was Baliuag first, then Valenzuela. Because Baluiag was a rural area, while Valenzuela at that time was still semi-rural, our sales went up and we started making money. So when I saw it boomed in Baliuag, I saw the potential.

“And we started putting branches in other provincial locations outside of the supermarket. Our first standalone was Malolos. It was small, just about 120 square meters.

“When we started out, we were never a threat to anyone. It was a not a powerful business. Our competitors were laughing at us. I mean they didn't pay so much attention to us because it was such a weak store at that time while they were very well known, about 50 years in the business, but over time we learned how to make it a stronger business.

“People did not know the brand and did not know us. So we were unimportant to the community at that time. We just had the perseverance and determination to push ahead. It was evolutionary.

“Because we were familiar with Bulacan, since my mother is from Baliuag, Bulacan, while my father is from San Miguel, Bulacan, we started opening stores in places like Meycauayan and Hagonoy. Today, we have around 12 to 15 stores in Bulacan.

“Then we started going up North, Pampanga then went to Cagayan Valley Region, which is Region 2, then to Ilocos Region on the other side of Luzon. We now have many stores across different provinces. We have a store in Tabuk, Kalinga, which is part of the Cordillera region in the mountains of northern Luzon. We are also in Bangued, Abra. Farther north, near the tip of Luzon, we have a store in Sanchez-Mira, which is part of Cagayan Province. We also have 10 stores in Nueva Ecija.

“Geography happens that way, eh. When you expand in one place, the next step is usually somewhere close because you keep seeing the opportunities around you. We just wanted to put up stores and grow the business. We had no dream of becoming a retail empire. It was all organic.

“Today, a typical Pandayan store is about 200 square meters and, hopefully, all on one floor. We also have a few larger stores that are around 400 square meters.”

Understanding the market helps entrepreneurs make better decisions about what to sell and how to reach customers. Entrepreneurs need to understand who the customers are, where they come from and what factors influence their choices.

The presence of competitors does not automatically make a market unattractive. In some cases, competition can confirm that demand already exists. Markets also change over time. Businesses that understand these changes can adjust their product mix and focus their resources on areas where demand remains strong.

Cabochan starts with the customer base. He first looks at the number of schools because teachers and students are Pandayan’s main customers. A smaller town with many schools can be more attractive than a larger town with weaker demand for school and office supplies.

Cabochan also looks at the number of people walking on the streets. Market reading does not always require complicated research. Observable behavior can already provide useful information.

He does not build the strategy around beating competitors on price. Pandayan keeps prices relatively low but avoids deliberate undercutting. He adjusts the product mix according to what customers ask for. Books were not initially the main business. Teachers and students began asking for particular titles, so Pandayan added them. Instead of assuming what customers wanted, the company listened to actual requests and adjusted its merchandise accordingly.

Even after adding books, Pandayan remained focused mainly on school and office supplies. Books were offered selectively. Cabochan treats suppliers as another source of market intelligence. Suppliers often see industry trends because they deal with many retailers and customers. Their information can help a business understand which products are gaining demand and which categories are weakening.

“When we put a store in a new location, I first look at the number of schools because our main clientele are teachers and students,” Cabochan says. “High schools especially, and then colleges would be good. Then we look at the pedestrian flow, the people walking on the streets. If the place looks busy, we can try it.

“When we put up a store in Sanchez-Mira, near the northern tip of Luzon, someone referred the place to us. There was a nice space, a building with low rent, so we tried it. On opening day, I went there.

“Luckily, we found a room where we could sleep. Then when I woke up in the morning, I looked around. It was all fields and the sea. I asked my companions, ‘What are we doing here?’ But the store ended up doing well.

“Our kababayans from the mountains of the Cordillera would go down to Sanchez-Mira. So the customers did not come only from Sanchez-Mira, but also from the surrounding towns.

“We don’t look for places without competitors. We just look at the potential of the place. If we end up having a competitor nearby, that’s okay. And we have no intention of putting other people out of business. Our pricing is not cutthroat or predatory.

“We have relatively low prices, but we do not go to the extent of undercutting competitors. So whenever we put up a store, the only bad thing maybe an existing local store can say about us is, ‘Why did you put up one here?’ But they can never say, ‘You’re undercutting us.’

“We put up a store not to put them out of business, but to serve a certain community. Our prices are designed for the countryside. We’re familiar with the countryside.

“We sell very few books. It’s mostly school and office supplies. When teachers learned more about Pandayan and more students came to the stores, they started asking for books. So we sold the books needed by high schools, like Florante at Laura and Ibong Adarna. Then, for college, we sold Jose Rizal’s books, El Filibusterismo and Noli Me Tangere. We don’t really promote the books. What we promote in schools are our school and office supplies.

“That’s why we were not hit hard by digital developments. When people started buying fewer books, we did feel it, but we had our own way of coping with digital developments.

“For selected stores, we have books. But for the others, we focus on school and office supplies. We have publishers in the Philippines who sell these books. They come to Pandayan to promote their own products, so we learn from them.

“We have a good working relationship with schools because our employees do fieldwork. They have time allocated to visit barangays and barangay offices, offices, and schools. So they do fieldwork. They do not just stay in the store. When they do fieldwork, they introduce Pandayan.”

A company’s performance depends heavily on the people behind it. Employees who have the skills and commitment to do their jobs well can improve productivity and contribute to the long-term growth of the business.

When employees see opportunities to improve their lives through the business, they have a stronger reason to care about its success. Fair compensation, training and opportunities to share in the company’s gains can create a greater sense of ownership and responsibility.

Effective people management begins with understanding employees beyond their job descriptions. Leaders who understand what matters to employees can design policies and incentives that are more relevant to them. Cabochan’s early exposure to workers shaped how he later managed them.

Instead of asking only how much employees earn, a company can ask what that income allows them to achieve. Cabochan approached employee well-being in practical terms. He did not treat happiness as an abstract idea. He translated it into specific outcomes: owning a house and lot, educating children, eating properly, dressing decently and having the opportunity to travel.

Better compensation is not presented simply as generosity. Cabochan expects it to produce stronger commitment, responsibility and effort. He argues that a well-paid employee can sometimes become more industrious than the owner because the employee spends far more time inside the store.

“When I started with the supermarket, I was in HR. At that time, we mostly did not hire college graduates. We hired elementary school graduates. This was in the ‘60s and ‘70s. So I became used to working with people who didn’t graduate from college and who were about my age, because I was already helping out when I was young, and we were living in the same building.

“We had parties together, Valentine’s, Christmas. We played basketball together. So I learned how to interact with them, their language, their behavior, and the way they looked at life because we were in the same place. We were talking to each other, playing basketball, and going out to different places. So I became very comfortable working with workers, working with people from the provinces.

“Even before that, when I was in college, I was active in Sarilikha, which was a college organization. We did fieldwork and community work in Pampanga and Taguig. We would do that every week. We would visit farmers.

“During one seminar, all the participants were asked, ‘What do you want to do in your life?’ I said, ‘I want to make people happy.’ But I didn’t know how. I just thought it was a good thing, something I wanted to do—to make people happy.

“So when I had the chance to handle a business, I was not interested in business as a financial operation. I was more interested in the people side. I thought of a way to manage a business and make people happy at the same time.

“I started to understand how to make workers happy. To make a poor person happy because most of our workers come from poor families, especially in the provinces. So you ask yourself, how do you make a poor person happy?

“You supply the basic needs. You enable the person to acquire the basic needs, so we have a dream for employees. We call it Pangarap para sa Panday. Each regular employee, sooner or later should be able to buy a house and lot. Should be able to send children to good schools, wear decent clothing, eat nutritious food. And travel once in a while.

“So if it happens, usually a worker is happy. So to make that happen, they need good compensation. So I worked on the compensation. It's relatively high compared to other retailers. It has 2 parts, the fixed portion. The fixed pay, and then the variable pay. Which comes from gain sharing, meaning they have monthly bonuses. And they have annual profit sharing.

“And then we have two cooperatives that are employee-owned. And these two cooperatives, one is a credit cooperative, the other is a multi-purpose cooperative, both are making money. So the earnings of that are divided among the employee owners. So, so their fixed pay plus their variable pay enables them to eventually buy a house and lot.

“Every year we monitor how many are able to buy lots and houses. Because we take it seriously. We have pictures to show, and we're always happy when we see a picture of a house posted sa kanilang Facebook account.

“Because when an employee is well paid, sometimes he or she is more industrious than the owner. For example, when you're an owner of a retail business, you want to go abroad. Who runs the business while you're away? And are you in the retail store 8 to 10 hours a day? No. The employee is there 8 to 10 hours a day. So if the employee acts like an owner, it helps the business a lot.

“We have a Kultura na Tagumpay, it has three chapters. First is on values, second is on the organization we want, and the third is on the type of managers we want.

“On values, it's centered on the Filipino value of kapwa, which means shared inner identity. It has 3 dimensions. Work on self, Pagpapakatao. Work with another, Pakikipag-kapwa tao. And work with others, Pagkamakatao. When a person becomes a mabuting tao, he becomes a good worker and the business grows because of this.

“The three-step process is personal growth of employees. So we focus on character formation, well-being and skills development. Where does that personal growth go? The next P is productive work. It's logical. After productive work, the next P is a profitable company. Does it make sense? If you're a worker, you're employed? And an employer treats you like that?

“I help you develop your personal growth? Where will you bring that? Where will you exercise your personal growth? In the workplace. So that's productive work. And when you're productive, the company makes money. So that became the secret formula of Pandayan.”

Learning becomes more valuable when employees can connect new ideas to the work they do every day. Concepts that are easy to understand and apply are more likely to influence how employees make decisions and work with others.

Companies should therefore adapt training to the needs and capabilities of their workforce. Complex ideas can be simplified without losing their meaning, while examples and language familiar to employees can make difficult concepts easier to absorb.

The value of workplace learning should be measured not simply by how much training a company provides, but by how much of that learning employees actually use.

A learning culture often begins with the leader. Employees are more likely to value learning when the person running the company also shows curiosity and a willingness to improve. Cabochan started by becoming a learner himself. He did not have a formal business background, so he joined professional organizations and taught himself management.

Cabochan understood that employees do not absorb an idea simply because it was discussed once. He emphasizes repetition. Ideas become useful only after employees hear them repeatedly and begin using the concepts in their work.

Learning at Pandayan did not flow only from management down to employees. Cabochan also learned from how employees reacted to the material. This creates a two-way learning process. The leader teaches, employees apply the ideas, and their response helps the leader refine what should be taught next.

Cabochan adapted complex ideas to the language employees understood. He looked for language that carried the same idea in a form employees could immediately recognize. A good training reduces the distance between an idea and the employee’s everyday experience.

He embedded the language of learning into daily operations. Terms such as Angkanan, Lahi and Kapwa factor were not confined to seminars. They became part of the company’s actual vocabulary.

“I joined the People Management Association to learn more about HR, so I learned from them and I kept reading on my own,” he says. “Do you know Book Sale?  The second-hand bookstore? Because I graduated political science and law. I didn't know much about business. I became a graduate of Book Sale University. I bought books there to study.

“Basically, I understood what I was talking about. Then repetition over time, because I realized you have to repeat from time to time. I deepened my own understanding through feedback from employees. I looked at their performance and how it affected them.

“So, if a topic does not play out in the workplace. I dispose of it doesn't work, but when I see a topic being integrated in the work, the words being repeated and used by employees, then I focus on that. So I used all that to help me manage people and learn more about people.

“In the beginning, like most companies, we used training materials based on English and Western management literature. But I noticed that most of our employees, many of whom came from the provinces and had only two years of college, did not respond very well. Either they were not confident about their English-speaking skills or they had nosebleed. So we were going nowhere.

“Maybe the absorption rate of our English training materials was only 10 to 15 percent. So I thought, this is a waste of time. I started translating them into Filipino, and we started to have very lively discussions.

“That became our adult learning program in Pandayan Bookshop, our Pamantasan ng Pandayan. It was our in-house company training. Because I was also doing consulting work and company training on quality and HR, it was not very difficult for me. The difficult part was translating Michael Porter, Peter Drucker, and all the different management concepts. Even when I was in the supermarket, I was already conducting training. Eventually, we developed this further in Pandayan.

“Because so it's hard for an ordinary Filipino to learn business who is not management oriented. If you mention to him, today our topic is the balance scorecard. Ano yon? What's that? It doesn't register. He's thinking maybe of a weighing scale or something. So we call it Timbangan ng tagumpay.

“And for example, today we will discuss closed-looped communication. When someone gives a message, you should give feedback. Ano yon? So I look for Filipino expressions which mean the same thing. Ang pag-uusapan natin ngayon saradong usapan. Everybody understands it.

“It makes you work better, because you understand it better. So for example, if I'm talking about, why don't we talk about humanistic psychology? Let's talk about the interhuman of Martin Buber. The ordinary employee will not find that interesting. It will not resonate with him.

“But if you tell him, pag-usapan natin ang pagkatao mo. Ikaw ba’y marunong makipag-kapwa tao? May pagpapakatao ka ba? It will resonate. He or she will understand. So even in our products, we don't talk about these are the major categories.

Our category management is called Angkanan, so the major categories, the higher-level ones, the widest, Lahi. Then below it, that is Angkan.

“We speak that way. We greet everyone, Mabuhay. Before it was hard. But now we've learned to say it to customers every day. When a customer enters, the security guard and the other employees say, Mabuhay. They can always speak English if they want. They're open, if you want to speak English, you can, but we will answer you in Tagalog. Most of our other employees are not fluent in English, so if you insist on speaking English, you will be alone.

“We hire for values, because the skills we know we can train the person. So when a recruit is evaluated, we call it the Kapwa factor. Marunong ba siyang makipagkapwa-tao? Can he or she develop as a person? Can he have good relationships with others? Can he work with the community? Can he go out and talk with other people, with strangers?”

When people believe they are treated fairly and respected by the company, they are more likely to cooperate, take responsibility and care about the quality of their work.

A high level of trust can reduce the need for constant supervision. Employees who feel responsible for the success of the business are more likely to make decisions with the company’s interests in mind, even when the owner or manager is not present.

Trust can also affect customers. Employees who feel valued by the company may be more willing to provide good service and represent the business positively in the community. In this way, the relationship between a company and its employees can influence the relationship between the company and its customers.

Cabochan built trust by changing the basic relationship between management and employees. His approach is not simply “treat people nicely.” It is a business system in which employees are expected to respond to trust with responsibility, cooperation and stronger performance.

Cabochan believes that employees who grow as people can become better workers. This means trust is not passive. Management invests in employees with the expectation that they will become more capable and productive. A company cannot simply tell people, “We trust you,” while giving them no support to improve.

Cabochan says Pandayan’s main advertisement is the performance of its employees. Instead of relying primarily on paid advertising, Pandayan depends partly on how employees treat customers. Courtesy, helpfulness and community involvement become part of the brand.

Trust-based management does not mean abandoning controls. It means having appropriate controls without building the entire organization around suspicion. Cabochan recognized that trust does not mean ignoring risk. He admits that theft or misconduct can happen. His answer is to run the business in a way that reduces the possibility.

“I make money through people,” he says. “I try to teach that to my friends, but sometimes what they teach you in school is against it eh. Because when you attend business school, they will teach you how to understand the financial statement and the payroll is always in the expense part.

“Sometimes I do that. So when you, when I tell my friends to do these programs for employees. They always think that it will entail more expenses, which means that their bottom line will be smaller?

“But I tell them, if they have the patience to work on the personal growth of employees, they will be more productive. It makes sense eh. And then the company will become profitable, but some want evidence eh, so I stop talking. I just work on Pandayan. If Pandayan succeeds, then that's the evidence.

“We don't have advertising, but we do field work with employees. And the name Pandayan is attractive. Then our color, yung golden yellow and burgundy red is attractive. That is our logo. Phoenix and Dragon.

“The phoenix is when you have problems, you rise above your problems. Hope in the future, and the dragon is be strong. You can be powerful and solve problems. I did not make it, but I adapted it, because these are common Chinese symbols. The background is Yin and Yang.

“But the main advertisement is the performance of our employees. Customers find them. We call them Panauhin, they find our employees extremely courteous, solicitous, helpful. They become part of the community.

“Sometimes when employees talk about their benefits with their parents, especially in the provinces, there is the question of the parents, ‘kumikita pa ba yung kompanya nyo? Then I tell them, why don't you say we're earning a lot of money? Because we work as one. We cooperate. We go through extraordinary efforts.

“By treating your employees well, it will be better, because there are only 2 parties talking, the workforce and management. The main idea is to make people happy. It's basically to make people happy. And when you asked how to execute that idea? Treat your employees well.

“When you put up a business. You must not reach a point when the employees become your enemies. Because some business owners, they look at their employees as adversaries. Baka nakawan ako nito? Di ba? You don't trust them.

“It can happen, but you should run it in a way that it becomes avoidable, because when you live in that constant state of mind na nakawan kaya ako nito? Ano kayang mawawala sa akin bukas? Lagi kang stress. So if you not comfortable working with employees that well, dapat paupahan na lang ang negosyo mo. Hindi dapat labor intensive.”

Henry Ong, RFP, is an entrepreneur, financial planning advocate and business advisor. Email Henry for business advice [email protected] or follow him on Twitter @henryong888