After 40 years, Belo’s home improvement company Wilcon is now a compelling retail player with a network of 36 ‘big box’ and community stores
BIG BOX FOUNDER. William Belo to list home improvement retailer Wilcon Depot, which he found 40 years ago
MANILA, Philippines – William T. Belo is a late bloomer. He was 32 when he started his own business: a modest 60-sqm store on Quezon Avenue in Quezon City that sold a variety of local brands of tiles, plumbing wares, electrical products, and hardware tools.
Unlike other prominent Chinese-Filipino businessmen like Henry Sy Sr, who founded multibillion-dollar retail empires with their own money after World War II, Belo did not build his fortune from scratch. His father bankrolled his hardware venture using proceeds from the sale of the family’s stake in a construction supplies store in Divisoria in Manila.
Belo’s jump into entrepreneurship came after working and honing his instincts in that Divisoria store. He balanced work hours during the day and his college studies at night. After earning his electronics and communications engineering degree from the University of Sto. Tomas, he worked full time in that outlet operated by his dad and relatives.
“Of course [took a lot of] nerves,” he told reporters on Friday, March 10, recalling the shift into being on his own. "Imagine for five years, you’ve been working in a company. You get paid, you don’t have to think about anything else. But when you put up a store, you’ll see if the customer will come and buy our products,” he said in a mix of English and Filipino.
It was 1977, and that first Wilcon Builders store in Quezon City was positioned to be a one-stop-shop for buyers who acquired properties in nearby Manila and Quezon cities where residential enclaves were sprouting.
Forty years later, Wilcon has grown to be a compelling retail player with a network of 36 "big box" and community outlets nationwide.
Wilcon Depot is set to debut in the Philippine Stock Exchange on March 31, with a plan to raise about P8 billion in its initial public offering (IPO).
Belo and his family feel that it is the right time to open the flagship company to the public. “We feel that Wilcon has a good story to tell. With 40 years of experience, I’m pretty sure people would go for it,” Belo told reporters during a briefing on its IPO.
A key factor that has allowed its steady ascent is its wide product selection of local and international brands sourced by Belo himself.
“He would go to trade shows and he would walk 20,000 steps a day. We need to keep up with him also,” said Rosemarie Bosch-Ong, senior executive vice president and chief operating officer of the company.
Each depot has about 200,000 stock keeping units, and is located within reach of middle to high income earners, a customer base fuelling the house construction and home improvement sector.
In building his own fortune the past decades, Belo learned a truism: he will encounter challenges beyond his control.
After the 1997 Asian Financial Crisis that caused import prices to soar, he tried his hand in another kind of product.
“The basic needs of a person are food, shelter, and, of course, clothing. As I already started in shelter, I felt I should go into something else. This time I started with a farm,” said Belo in an interview with GoNegosyo in 2016.
What had started as a layer farm producing chicken eggs later paved the way for crocodiles.
The Belos initially started breeding crocodiles to be a waste disposal system for malnourished chickens that could no longer lay eggs. It later expanded into selling finished products, such as crocodile sisig and sausages in its own depots. The family also sells up to 4,000 crocodile skins a year, supplying designer brands such as Louis Vuitton and Hermes.
Much like the home supply retail service of Wilcon Depot, the crocodile business required patience. It took years before the crocodile products were ready to enter the commercial market.
Winning the niche market
Today, the man who bred crocodiles is at the helm of a business empire that has managed to evolve and protect itself and become stronger than other businesses, much like a crocodile.
The 71-year-old Belo now heads Wilcon Depot Inc, a leading home improvement retailer in the Philippines worth about P15 billion. It targets a niche market in the local retail industry, which is dominated by some of the richest tycoons in the country.
Belo’s bold growth strategies have brought him head-to-head with the powerful retail giants.
According to the prospectus of Wilcon, a local brand, it is bigger than foreign brands such as Ace Hardware, Handyman, True Value and D.I.Y. Some of these brands do not offer similar product lines as Wilcon, but they target the same customers seeking to improve their homes.
A leading hardware store about a decade ago was Ace Hardware, which the Sy family brought to the Philippines to be among the anchor stores in its network of SM malls. The Gokongwei’s Robinsons retail group operates Handyman’s local presence, and has recently acquired stakes in True Value, AM Builders and DIY to scale up.
These brands are mostly mall-based, and are dependent on the mall’s foot traffic. With lower capitalization needs, simpler operations and exclusive tenants, they can simply ride on the expansion plans of and follow where their mall owners go. Some of their wholesale clients that are into construction business are also usually owned by or affiliated with the mall owners.
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Wilcon did not have the same big-brother structure to depend on.
It grew its network organically. It had a slow start, adding only 5 stores from 1989 to 2002 as it followed the trend of going beyond its and the competitors’ geographical origins. Each new store had an average area of 2,400 sqm.
The turning point was in 2002.
That year, Belo made a strategic decision to accelerate the expansion of its network of stores. In 2003, it opened in Las Piñas its first depot, a store format larger than their usual at 10,000 sqm size. Similar to the big-box formats of Lowes and The Home Depot in the US, such a massive space meant Wilcon can sell more products and brands.
With wider choices of local and imported furniture, furnishings and houseware, paints, building materials, as well as a grocery type of a set up, Wilcon bolstered its positioning as a one-stop shop that suits the retail needs of homeowners and contractors, whether it be for replacement of fixtures, housing repair and maintenance or upgrade of home structures.
Over the next 13 years, Wilcon opened 27 more depots, with store sizes ranging from 2,800 sqm to 31,000 sqm. Such is the importance of these large-format stores that they accounted for almost 97% of the company’s P8 billion revenues in the first 9 months of 2016, according to the prospectus.
A catalyst to Wilcon’s expansion was a major leg of the national economy’s growth: the construction sector, which contributed 5.6% to the GDP from 1990 to 2015.
Residential construction, in particular, has increased yearly with total residential floor area growing at an average pace of 7.6% during the same period. It reached a total area of 25.07 million sqm as of 2014, according to the Philippine Statistics Authority.
Among depot stores in 2014, Wilcon comfortably sits on top with a P14.5 billion revenue and 56% market share. Visayas-based Cebu Overseas Hardware is a far second with P3.8 billion and 14%, respectively.
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Conquering urban centers
To continue the momentum, Wilcon is seeking to cover more urban centers, especially in the Visayas and Mindanao.
The target P8 billion IPO proceeds will mostly finance the opening of 8 large-format stores in 2017. It is aiming to open 29 new stores in the next 5 years in Cavite, Zamboanga, Iloilo, Tacloban, Cabanatuan, Bicol, General Santos, Davao, Lucena, Isabela, Tagum, Tuguegarao and Surigao.
Not to miss out on serving customers who just want tools and materials for simple housing repair and maintenance works, Wilcon also has small-format, community-based stores. Launched in 2009, “Wilcon Home Essentials” have a store size of 1,000 to 5,200 sqm. As of September 2016, Wilcon had two of these mall-based stores and 4 stand-alone branches.
Having been in the business for 4 decades, the company also capitalizes on its customer base that spans generations. Among its key marketing campaigns is “Wilcon Stories,” which feature anecdotes from the company’s customers serviced by Belo himself at the first store along Quezon Avenue. A key branding message is that Wilcon is here for the long haul.
“We try to be as hands-on as possible,” shared Belo.
His children, Lorraine Belo-Cinochan and Mark Belo, have helped sustain the generational engagement with customers. Lorraine is President and CEO of the company while Mark is CFO. “Now, they do most of the work,” the older Belo said of his children.
As for newer customers, incentives and loyalty programs draw in sales through a rewards-based system where customers can accumulate points as good as cash. Active members have grown exponentially from 89,118 in 2011 to an estimated 450,000 as of September 2016, according to the company’s prospectus.
“We see to it that all of our customers would not not get bored after they put up their houses. [They] put up a house and after some time, 5, 10, 20 years, there’s nothing to do anymore. They can come back and find things for decoration, do some renovations. It’s also a continuous process for the customers to come back and visit us,” Belo explained.
Inside the stores, Wilcon offers services such as a 3D design hub, lounges for meetings, an in-house coffee shop. They recently launched "BOPIS," a buy-online-and-pick-up-in-store service.
While Wilcon is in a business that banks on economies of scale, it also needs to have an army of employees trained to respond to construction-related technical issues of its customers.
As the company gears for expansion, loyal employees are nurtured for growth in their positions, with many working until retirement.
Likewise, along with Belo in opening Wilcon’s first branch in 1977, were his two cousins and another employee. The 3 retired only a few years ago.
“It’s also the fortune of Wilcon, that we work as a family,” said Belo. – Rappler.com