Marcos imposed martial law in September 1972. Within two years, the stability brought by authoritarian rule and a surge in prices of the Philippines' commodity exports boosted the economy. Ever became a shopping hub. "I started the one-stop shopping concept in the Philippines," says Go proudly. Because customers were mainly the district's tens of thousands of students on slim allowances, Ever department store and supermarket - the mall also housed three cinemas - kept prices low. But volume made up for thin margins.
Soon, Ever recouped construction expenses of $150,000. In 1975, Go used the profits from the Recto Avenue emporium to build the $6 million, 40,000-square-meter Ever Gotesco mall in Kalookan City, a populous but downmarket part of metropolitan Manila. In five years, Ever retail stores in three shopping centers had sales of 4.86 billion pesos - $648 million in 1980 dollars.
Fast forward to 1996. Now 48 and chairman of the Ever Gotesco group of companies, Go recently formed Ever Gotesco Resources and Holdings (EGRH), which owns two major shopping malls and is building two more outside Manila. It will sell 27.5% of its stock in an initial public offering later this year. Go has also acquired 85% of listed Suricon, a struggling mining concern that will be renamed Gotesco Land. He has injected assets valued at $192.3 million into the firm, including a 120-hectare low-cost housing project in Bulacan province north of Manila and a 120-hectare hot springs resort in Laguna down south. Go is building golf courses and has bought a small bank and 20% of a paging company. His goal: to build a $2-billion retail and property conglomerate that earns $350 million a year.
Can he do it? The six Ever department stores and supermarkets notched sales of $346 million last year, but net profit was only some $173,000, a poor 0.05% return. Go says gross profit was actually 20% for department stores and up to 10% for supermarkets. But Ever had gone on a renovation spree. With that out of the way, he expects 1996 net profit to top $33 million, 7.5% of forecast sales of $450 million. He is unfazed by the imminent entry of foreign retailers. Despite industry protests, the Philippine Congress is expected to scrap a 1954 law that allows only 100% Filipino-owned corporations in the retail sector. Go says he is talking with U.S.-based Wal-Mart and Price Ventures about a partnership.
With or without a foreign backer, the go-getting retailer is expanding in a big way. By 2000, says Go, his group will be operating nine retail outlets and raking in $760 million in revenues. They will be housed in a string of shopping malls across the country. EGRH's shopping centers in Laguna and Pangasinan provinces on the main island of Luzon are scheduled to open in 1997 and 1998. "We are negotiating to buy future mall sites in Mindanao in the south," says Go, "10 hectares each in the cities of Davao and General Santos, and six hectares in Cagayan de Oro City." He is spending millions on property and resorts development, but retailing remains Go's first love: "It's what made me what I am today."
More to the point, he credits the Filipino masses for making him a billionaire. Along with supermarket chain Uniwide, Ever has focused on the lower classes . That is a huge market in a country of 68.5 million people with a per capita GNP income of only $1,100 a year. "Up to 70% of the average Filipino family's income goes to food," says Go. "This is why we're putting up supermarkets, which account for the bulk of our retail sales. The remaining 30% of a poor family's income is spent on clothing and other products like appliances. So we opened department stores." Ever is today the Philippines' third-largest retailer in sales. Uniwide, which is also planning an initial public offering, is No. 1 with revenues of $423 million last year.
The more well-known Shoemart stores, which target the middle class, is second with 1995 revenues of $350 million. But the department store and supermarket chain owned by the acknowledged sultan of retailers, Henry Sy, is the most profitable. At $14.7 million, Shoemart's profit last year represents 12% of turnover. In contrast, Uniwide earned only $338,400, a return on sales of 0.08%. The disparity in margins points up the importance of traffic in targeting the low-income segment. "The idea is to generate enough volume to make a profit," says Go. One advantage of serving the poor: "They pay in cash." That means Ever need not worry about commissions to credit card companies, which typically take a 4.5% bite out of sales.
In expansion, Ever has the edge over Uniwide, which is only now moving into shopping malls. And Go is not building in affluent places but in areas convenient to low-wage earners. In addition to the Recto mall and two others in Kalookan, Go also owns shopping centers in the Metro Manila towns of Las Pi–as and Cainta, and Commonwealth district in the outskirts of suburban Quezon City. Go had bought the out-of-the-way properties when almost no one wanted them. He values the land and shopping malls today at $1.5 billion.
The retailer is also making sure that Ever prices remain hard to beat. Go sells a can of Hormel corned beef for 40.95 pesos ($1.60). It costs about a peso more at Uniwide. A 340-gram can of meat loaf retails for 66.15 pesos at Ever. It is 69.70 pesos - 5% more expensive - at Shoemart. Go says Manila's reduction in tariff duties is helping Ever keep prices low. So do cheap wages. Like many other retailers, Ever hires workers from local employment agencies for six months at a time, avoiding paying benefits like bonuses and vacation leaves. That's a practice that legislators say they want to curb by allowing foreign retailers in. Because of the new competition, argues Sen. Sergio Osme–a III, local retail workers "will have to be made permanent and paid better."
But the country's two supermarkets associations oppose the scrapping of the retail law, which was enacted to protect small sundry stores owned by Filipinos from competing Chinese merchants. Ironically, ethnic Chinese businessmen who have become naturalized citizens are leading the fight against deregulation. Jose Albert, president of the Philippine Association of Supermarkets, warns of "predatory pricing" by foreigners to carve out market share: "This is what will kill a lot of retailers because the Philippine market is very price-sensitive."
Surprisingly, Go does not share the worries of his fellow retailers. Consumers will benefit from tighter competition, he says, and local operations can tap the expertise of the newcomers. European discounter Makro has already teamed up with Shoemart and the Ayala group, the Philippines' oldest property developer, to open a members only, no-frills wholesale store east of Manila. Also said to be interested in the Philippines is Wal-Mart, which has joint ventures in Indonesia, Taiwan, Thailand and Hong Kong, and is opening outlets in southern China.
Go says Ever will continue to compete because of its intimate knowledge of the low-end market. He says the facelift last year - additional airconditioning units were installed and shop interiors were redesigned - would also help. Even the exteriors have been spruced up. Ever Gotesco Commonwealth Center, completed in 1994, looks like a Disneyland castle. Ever Laguna Plaza will have a science fiction theme. One shopping mall, the $20-million Ever-Gotesco Grand Central in Kalookan, is the envy of other retailers because of its location. It houses the northern terminal of the 15-km LRT elevated mass transit system. Some 500,000 commuters go through the turnstiles every day.
Then there are Go's other enterprises. Last year, he bought bankrupt Bangko Silangan, now known as Oriental Bank, and infused $11.9 million in new capital. "It's a service to our customers, suppliers and contractors," says Go. Turning his attention to the upscale market, he is building a yacht club at a private hideaway in Batangas province and a 240-room hotel at nearby Evercrest White Cove Beach Resort, which he also owns. Some $17 million worth of golf membership shares have been snapped up; Go expects an additional $276 million when the Securities and Exchange Commission approves the sale of shares in the yacht club and the Chateau Royale Theme Parks due to open in 1997.
After starting work on two housing estates last year, Go has launched three more in 1996. The 39-hectare Evergreen Executive Village in Kalookan will be completed this year. Among other projects, Gotesco Land will be building the 200-hectare Kang-Irag golf resort in the central city of Cebu. Aren't golf courses harmful to the environment? "Our modern drainage and sprinkler systems recycle water," says Go. "And the clubs provide the poor job opportunities." He also dismisses fears about a property glut in the Philippines. Says Go: "There is so much demand to be met. And the economy is getting better and better."
Another part of the Go empire is Gotesco, the hardware and electrical supplies manufacturer started by his late father, Go Tong, an immigrant from the Chinese city of Xiamen. The patriarch had financed his son's first mall from the small factory's earnings. Gotesco (1995 sales: $67.6 million) now benefits from synergies with Go's construction projects. Like his father, Go credits 12-hour office days for his success "Hard work is the secret of every business," he says. "It's 60% hard work - and 40% luck." And the ability to read the people's pulse.
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