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Chapter 1 THE PROBLEM Background of the Study According to Clarks Sector Model Industry can be classified in a variety of ways

.these classification system commonly divide industries according to similar function markets and identify business producing related products. Many developing countries (Peoples Republic of china, Philippines etc.) depend significantly on industry. Merchandising industry is one of the common kinds of industry present here in the Philippines. A merchandising business will generally buy their product from a wide range of distributor domestically and internationally and market their products in hug consumer shopping facilities. Merchandising as an industry has been growing by leaps and bounds, over the past decade. There are different types of merchandising such as supermarket chain, clothing, department store, textile outlets and food chains that have emerged at present. General merchandise store are some of the most visited establishments in the country. Whether shopping for an item of clothing, a household appliance, or even food, the buyers will likely go to one of these stores to either make a purchase or compare selections with other retail outlets. General Merchandise Store, in particular one, sells a wide variety of items in their store. This category is comprised of department store, as well as super center, warehouse, and club stores.

In the retail system, multinational chains have an advantage over smaller retailers by centralizing retail and distribution systems resulting in more competitive pricing and more distribution power over small local businesses. The power to control the production and distribution of products was transferred from large numbers of local retail businesses to small numbers of large business corporations (Shils & Taylor, 1997). Large centralized retail businesses have their own lines of manufacture, distribution, and retail outlets. In addition, these multinational retailers are advantaged in terms of having privilege in tariff reduction. Thus they can sell a variety of products and have lower costs due to the buying power and use of technology. Within this advantage, multinational retailers are taking away a large proportion of business from the small local retailers. According to Siam Future Development PLC report, the number of small local retailers in the first half of 2004 was projected to decline by 10% in the major cities such as Ubon Ratchathani. Local retail businesses that lack the financial resources to maintain and improve their businesses have fallen further behind in competition with the larger retail businesses. This is also due to their lack of purchasing power when compared with the larger businesses. The smaller businesses have not had the benefit of foreign participation and the associated injection of foreign capital. These multinational retailers strategies are all similar, focusing on low prices, wide selection of stock and aggressive marketing. This results in the customer being persuaded to buy from the larger retail businesses and reduces the turnover with the smaller businesses. This has a flow on effect which results in the small retailer being left overstocked and often having stock reach its expiry date before being sold. Compared to the more competitive and efficient multi-national

retailers, smaller Thai-owned retail business are unable to compete and tend to disappear (Panprasong, 2000). The supermarket, as it came to be known, was initially a phenomenon of independents and small, regional chains. Eventually, the large chains caught on as well, and they refined the concept, adding a level of sophistication that had been lacking from the Spartan stores of the early 1930s. In the late 1930s, A&P began consolidating its thousands of small service stores into larger supermarkets, often replacing as many as five or six stores with one large, new one. By 1940, A&Ps store count had been reduced by half, but its sales were up. Similar transformations occurred among all the majors; in fact, most national chains of the time saw their store counts peak around 1935 and then decline sharply through consolidation. Most chains operated both supermarkets and some old-style stores simultaneously for the next decade. The grocery industry has recently been struggling with big box retailers that now have supermarkets as a part of the Super Center layout. The failure of the food retailing industry in establishing a compelling approach to marketing in the face of big box retailers is understated, according to Coupe (2005). Firms traditionally react to Wal-Mart emergence by trying to match Wal-Marts marketing strategy -- low prices and complete product selection. However, messages like one stop shopping, well save you money, and buy one get one free do not adequately separate retailers. Instead grocery retailers should create a retail brand that can be differentiated through clever and unique marketing. Marketing messages must also target specific audiences like seniors, teens, men, women, specific health concerns, etc. These messages should strive to change the way people acquire things in a methodical, determined, and planned attack.

There are several major merchandising businesses operating in Bicol region such as Puregold, Novo, LCC and others. The merchandising businesses are on a rapid expansion driver to urban areas. Liberty Commercial Center (LCC) is one of the competitive companies in merchandising industries. It is one of the pioneer commercial establishments in Tabaco Albay in 1945 and probably in the Bicol region engages primarily in retail business. LCC mall is one of the major tourist and favorite shopping destination in Tabaco City. The mall was started with a small store called Liberty Bazaar in Tabaco City in the year 1945. In year 1981, they put up their first branch in Legazpi City. The new branch store was easily become a popular shopping destination for families and the surrounding communities, Inspired by this development, in year 1989, the company decided to transform its company name to LCC-stands for Liberty Commercial Center, the first LCC Mall in Bicol Region. The company is committed to a development that relies on the Filipino entrepreneurial spirit as an engine that will enable the country to meet the challenges of the new century. For 60 years of `experience and leadership in the merchandising industry, LCC has long been considered as a trusted friend who knows the bicolano consumers by heart serving them always there reaching out touching lives, attending to their daily needs. Like a true, LCC continued to reach out to more bicolano. LCC established LCC mall and other branches in Naga City, Legazpi City, Sorsogon City, Ligao City, Palangui Guinobatan, Camalig, Nabua Pili, Daraga, and Iriga City. Newest branch was established in Labo, Camarines Norte the first ever Market plus in the province. It was blessed last July 28, 2012 and on the same date a short

program was held at Villa Eusebia were few people were invited. Speeches had been delivered by different heads in the company and after an hour, a mass was held at St. John the Apostle Church sponsored by the LCC team LABO. On the 29th day of July 2012, a successful opening of the LCC Market Plus where tremendous shoppers came and visit the place. There were plenty of promos offered like the free nail cutter and cord organizer when you purchase worth P300 from the mens and childrens accessories, and one of the most exciting promos offered were the HAKOT RESIBO which showcase the most resibo the shopper have so the more chances of winning. Retailing industries are every way where so that competition arises in business world. Competition is the rivalry among sellers trying to achieve many goals as increasing profits, market share and sales volume by varying the element of marketing mix price product distribution and promotion. Merriam Webster defines competition in business as the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms. It was also described by Adam Smith in the wealth of nation (FAG) and other classical economist as allocating productive resources to their most highly valued use competition according to theory, causes commercial firms to develop new products, services and technologies which would give consumers greater selection and better product. The new company like LCC Market Plus has new innovation and or is coming into the market and they are using a penetrating effort to get all the possible share of the market they can get such as having the better product, latest devices and brought something new to the market, the existing companies should always learn to keep a close eye on competitors to keep in step with new innovations I their market. And when a new

businesses comes in and is penetrating they are going after the existing client that are not totally brand loyal and trying to save money. That means existing businesses cannot over price their product and expect their client to continue to pay much higher prices with little or no added benefits compared to the cheap company. The researchers emphasize the need of future researchers to pay more attention in conducting studies related to this subject. The objective of this research is to assess the effect of establishing a business to its related businesses in a particular area, to measure whether the presence of large business affect the sales of a merchandise supermarket such as grocery store, sari-sari store, dry goods store and others and meat shop.

Statement of the Problem This study aimed to determine the effect of LCC Market Plus in other merchandising business of Labo, Camarines Norte. Specifically, this study answered the following questions: 1. What is the profile of respondents in terms of : 1.1. age 1.2 gender 1.3 civil status 1.4 educational attainment 1.5 monthly business income 1.6 occupation 1.7 name of business 1.8 type of business 1.9 year of business operation 2. What is the effect of LCC Market Plus to other business in terms of : 2.1. Average daily sales 2.2. Average daily profit 2.3 Traffic Count

2.4 Employment 2.5 Business Prospect 3. What are the problems encountered by other business in terms of competition? 4. How does the firm survived to compete to a competitive business like LCC? 5. What happened to the supply and demand of your firm for the year 2012?

Significance of the Study The main purpose of the study was to determine the effect of LCC Market Plus in the retailing industry of Labo, Camarines Norte. The researchers believe that the study will be useful in the following sectors: Owner of the Retail Business- through this research the firms become open minded to become proactive, creative and competitive to survive to the competition and to gain more profit. This will also help to influence with regard to decisions as to whether to stock particular brands or to promote them Consumer/Community- Through this study, consumer will be provided the information about the competition in terms of quality and affordable price between firms in Labo, Camarines Norte. This will also help them to look for the best deal products that make them comfortable.

Local Government unit of Labo- the result of this study to enhance the retailing activities in Labo, Camarines Norte. And will help them to promote economic condition on the municipality and implement different strategies concerning the proper approach on business community. Supplier-in this research, the supplier will be knowledgeable on how and when they control the supply of goods to the selected retailing business of Labo, Camarines Norte. It serves as a basis or reference as to what demand of different products or supplies in the market. Researchers themselves- as business economics students this research will be useful to more understanding how competition does affected in business. And we will be knowledgeable about merchandising and retailing business, it will serve as a guide to the researcher to know how to manage a business in the future. Future researcher- the future researchers can use this as a useful reference material for their studies. This will also enhance their knowledge regarding the effect of establishing LCC Market Plus to the other retailing business.

Scope and Limitations This study focused on the effects of LCC Market Plus in selected retailing industry in the proper town of Labo, Camarines Norte.

The researchers used total enumeration to get the respondents related to LCC Market Plus products. To gather information from the respondents, Its categorized by supermarket such as grocery store, sari-sari store, rice dealer, minimart, super mart and meat shop. The researchers want to understand more about the profile of the respondents, the effect of LCC Market plus to other businesses in terms of sales, the problems encountered by other business in terms of competition, the strategies on how to compete to a competitive business, and the changes of supply and demand of other firm when LCC Market Plus established.

Definition of Terms Brand Loyalty consumers become committed to your brand and make repeat purchases over time. And it is a result of consumer behavior and is affected by a person's preferences. Business (also known as enterprise or firm) is an organization involved in the trade of goods, services, or both to consumers. And a classification that refers to a group of companies that are related in terms of their primary business activities. Competition is the rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion. Merriam-Webster defines competition in business as "the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms. Competitiveness pertains to the ability and performance of a firm, sub-sector or country to sell and supply goods and services in a given market, in relation to the ability and performance of other firms, sub-sectors or countries in the same market. Is the ability to take the most advantages position in a rapidly changing market environment. Department store is a retail establishment with a building open to the public which offers a wide range of consumer goods such as clothing, house wares, furniture and

appliances. It typically offers a choice of multiple merchandise lines, at variable price points, in different product categories (Also known as "departments" hence the name). Industry is the production of an economic good or service within an economy. And it is an organization or economic system where goods and services are exchanged for one another or for money. Innovation is the application of new solutions that meet new requirements, inarticulate needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. Liberty Commercial Center (LCC) is the pioneer and a growing distributor, retailer, wholesaler of Department Store and Supermarket items in Region 5.A Company that epitomizes the Filipino entrepreneurial spirit of investing, creating more jobs and developing mall that offers consumers a wide choice of products, outstanding customer services and modern facilities in a retailing scheme. Merchandising is any practice which contributes to the sale of products to a retail consumer. At a retail in-store level, merchandising refers to the variety of products available for sale and the display of those products in such a way that it stimulates interest and entices customers to make a purchase. Retailing is consists of those business activities involved in the sale of goods and services to consumers for their personal, family or household use. And to distribute in small portions or at second hand; to tell again or to many (what has been told or done); to report; as, to retail slander.

Supermarket is a large form of the traditional grocery store, is a self-service shop offering a wide variety of food and household products, organized into aisles. It is larger in size and has a wider selection than a traditional grocery store, but is smaller and more limited in the range of merchandise than a hypermarket or big-box market.

Endnotes Lcccare@lccgroup.com http://www.businessdictionary.com/definition http://en.wikipedia.org/wiki Barry Berman and Joel Evans, Retail Management a Strategic Approach. 6th edition

Chapter 2 REVIEW OF RELATED LITERATURE AND STUDIES This chapter presents the review of related literature and studies that are relevant to the present study. Synthesis of the State-of-the-Art is discussed to determine the similarities and differences of the previous studies to the present study.

Related Literature For clearer presentation of the study, the researchers made a summary of what they had read from books, newspapers, magazines, and published and unpublished thesis found in the library and internet. According to Mervin Morris, Allan Gold and Annye Camara (1992) (founders of retail firms) may be used as a checklist for those seeking to start a new retail business or purchased an existing one:

1. The odds of success are best if an entrepreneur has experience, confidence, and a passion for the retail business. 2. Every venture needs a clean and concise mission statement. 3. The firms organizational culture should encompass innovation and

experimentation. 4. The business plan should be tied to multiyear projection. 5. A list of strengths and weaknesses should be prepared. 6. An adequate information system is critical to planning and control. 7. Excellent employees make a real difference. 8. Marketing research should be regularly conducted by questioning consumers about how the firm is doing, what additional goods are desired and what could make the firm easier to patronize. According to Palmar and Bill King, owner of RVI, which sells motorcycle and snowmobile accessories, led the group that split from the chambers of commerce to form the Bath Business Association (BBA) (1993) in tile of how small firm are competing with Wal-Mart. Wal-Mart is a threat to every small business in Bath that is are things you have to do. Started copy its profit and loss statement and bringing them to our meeting just to scare people. According to Blair and Kumar, (1997).Many economists believe that analyzing a retail trade area is much like analyzing a zero-sum game. Unless the population or incomes are growing substantially, there is a fixed amount of money to be spent in the retail sector. If a large store is opened in the trade area, it is going to capture a

considerable amount of trade. That can only mean that, in total, other merchants in the trade area will lose a comparable amount of trade. Jain (2000) revealed that to establish a strategic edge over its competition with a viable marketing strategy. It is important for the business unit to clearly define the market it tends to serve .it must segment the market, identify one or more subsets of customers within the total market and concentrate its efforts on meeting their needs. He also discussed that promotion strategies are concerned with planning, implementation and control of persuasive communication with customers. Promotional perspective must also be properly matched with product, price and distribution perspective since it is the key to success in many businesses. Jain (2001) added that can competitiveness of a business will lead to consumers decision, either to adopt or reject the product. In competitive market place, competitors analysis is needed competitors must identify their key rivals; assess the objectives, strategies, strengths and weaknesses in order to select which competitors to outright. Businesses must adopt a product strategy that will greatly influence the purchase decision of consumers. McGee and Love (1999) found that most small retailers lacked budgeting and forecasting skills, either because they failed to grasp their importance or simply did not have the ability to do so. Taylor and Archer (1994) pursued this point further, indicating that most successful small business have at least some simple but effective information system (manual or automated) which helps them make accurate decisions by monitoring financial, customer, industry and market trend information. This prepared smaller

competitors to face changes in the market. Finally, Stone (1995a) advised retailers to automate operations and to adopt effective information systems. Arthur Andersen & Co. et. al. (1994) recommended that small retailers consider the following (ranked by importance) when setting their prices: expected margin, competitors price, retail price suggested by manufacturer, customers perception of price, estimated demand, landed cost, companys image, whether the product in question is a basic, fashionable or seasonal product, and in-stock position. Related Studies A study entitled Price and Variety in Supermarket: Can Store competition Hurt Consumer? By Andre Andrade (2010) in this paper, focuses the impact of competition on a firms decision of products and prices. He focuses on grocery stores, an industry where variety is particularly relevant. The reason for this is that consumers shop frequently which makes travel costs an important part of the grocery decision and induces consumers to concentrate their purchases in only one store (Information Resources, Inc. (2002)). As such, the introduction of a new product by one supermarket has the potential to capture the total grocery expenditure of the households that value that new product highly.

A study entitled The Economic Impact of Wal-Mart Supercenters on Existing Business in Missssippi by Kenneth E. Santos, Georgeanne Artz and Albert Myles This study examined the impact of Wal-Mart supercenters on the sales of existing businesses in local trade areas. Data from sales tax reports in Mississippi were used to analyze changes in the sales of food stores, general merchandise stores, furniture stores, building

materials stores, miscellaneous retail stores and the total county. The Mississippi data have two main advantages. First, unlike most states, all food items are subject to the sales tax in Mississippi; therefore this data set allows us to account fully for food store sales. Also, since food items sold in supercenters are reported in general merchandise store sales and not in food stores sales, we have a unique opportunity to identify changes in market structure that have occurred with the addition of a supercenter. Second, supercenters have been open in Mississippi for several years, sufficiently long to observe market changes. Moreover in the study of Sean Golden, Noel Jeutang, Ratikanta Pattaik, David Rosenbaum and Eric Thompson (2006) entitled Big Box Stores: Their Impacts on the Economy and Tips for Competing, It was conclude that retailers, whether locally-owned stores or chain stores, face a challenge when a large, big box stores such as Wal-Mart locates in their community. While some stores will not choose to change direction in the face of this new competition, stores that wish to have a number of strategies at their disposal. These include improving service quality, improving merchandising, improving marketing, and improving management of marketing information.

McGee and Rubach (1996-1997) studying how small retailers react to the entry of large retailers (notably Wal-Mart), classified retailers as either those who perceived their environment as benign or those who perceived it as hostile due to the coming of a WalMart into town. Among the group that perceived the environment as hostile, those who provided products similar to Wal-Mart performed the worst with respect to net income after tax, sales growth and the overall performance.

Duff (2005) investigated a large format retailer, Meijer that has been changing its store formats to be more appealing to customers while continuing to challenge Wal-Mart. After reorganizing management and reducing staffing costs, the company has been pursuing several specific strategies in its stores. These strategies include: better applications of consumer trend knowledge; lower fixtures; clear sight lines; sophisticated merchandising including improved signage - for information and navigation; the addition of a dollar section; focusing on placing complementary products adjacent to one another, lighting for effect including spot lighting, and the implementation of hot bays or swappable displays that are placed on the pallet so that merchandise can be switched out easily.

Theoretical Framework The subsequent statement show the different theories that support the topic under study: including Maslows Hierarchy of Needs Theory Poster five forces of competition Maslows hierarchy of needs as mentioned by Etzel et.al (2004) state that all people posses a set of five need arranged in hierarchical form the most basic survival needs such as needs for foods, clothing, shelter an education up to the most advanced need for personal growth and development. The five levels of need were met just like Maslows theory says the consumers were ready to move to next need. As to relate in the present study selected retail business must satisfy their needs like safe in the comfort of properly packaged fixed price and reassured that they will get what they for and secure in the thought that if wronged they had remedy of returning the things

they buy. Another are going some special offer at treatments to the customer to fell that they are special. As learned from Jain (2000), buying determinant theory illustrates that behavior is due to the combined effects of four factors such as: size, corporate culture policies and individual factors such as age, experience and education of any individual person involved in the decision. To survive and prosper in the midst of changing environment factors companies must stay at the foremost part of the changes affecting their industries. Citing its relevance to the present study, management of registered business must be able to adapt to changes in the market environment, by creating new strategies to catch up with the changing environment to become more competitive. Another theory related to this study. Rivalry Theory as subjective relationship between competition and by investigating its antecedent and consequences in doing of so, they draw upon literature on competition between individuals, group, firm and organization. The rivalry theory was choosing to become backbone of the study for the reason that it helped to the researcher to better understanding on how competition affect to the retailing business. Addition by Deutsh (1994), he defined competition in purely situational terms, as a setting in which the goal attainment of participants inherently comes at the failure of the other. As Michael Porter explain in Posters Five forces of Competition, rivalry among existing firms in Labo Camarines Norte affecting to the economic activity of individual firm so that retailers need to create an strategic planning to survive in the competition.

Maslows Hierarchy Theory

Buyer Determinant Theory

LCC Market Plus Retail Industry

Rivalry Theory

Competitiveness of Goods and Services

Figure 1. Theoretical Paradigm of the study

Conceptual Framework

This part of the study presents the conceptual flow of evaluation and analysis on the effect of LCC Market Plus to the retailing businesses of Labo, Camarines Norte. The conceptual Framework which included the three important elements: the input, process and output. The inputs refers to the following: the profile of the respondents in terms of age, gender, civil status, occupation, name of business, type of business and year of business. The process includes the data gathering tools using survey questionnaires as the main instrument supported by unstructured interview. After gathering the data, it will come up to the analysis and interpretation of the result. The output of the study contained the possible effect of competition between existing retail business. The feedback provided information which will give adjustment and improvement to the variable present in the input.

Chapter 3 RESEARCH DESIGN AND METHODOLOGY This chapter presents the research design, population of the study, the sources of data and data gathering procedures used in the study. Research Design This study utilized the descriptive method of research, since it determine the effect of LCC Market Plus to the retailing businesses in Labo, Camarines Norte. The researchers conducted a survey using unstructured questionnaire in gathering data to determine the effect of LCC Market Plus to the retailing businesses of Labo, Camarines Norte. Population of the Study The respondents of the study are the registered businesses in labo Camarines Norte there are 391 registered businesses out of total population the researchers selected 55 registered businesses which are related to the supermarket products of LCC Market Plus and near at the proper town of Labo, Camarines Norte.

Table 1 shows the population of registered businesses in Labo, CamarinesNorte that are related to the supermarket Products of LCC Market Plus and also near at the proper town of Labo, Camarines Norte.

Sources of Data The data gathered in this study were classified as primary and secondary data. The primary data were obtained from the information given by the respondents through the unstructured questionnaire. The secondary data were those data gathered from the library and internet research, various reading materials such as Economics Books, Marketing Books, newspapers, magazines, unpublished and published thesis which gave needed information to make this study effective. Data Gathering Procedure To gather the primary data, the researchers prepared a unstructured questionnaire and a letter of request duly signed by their adviser. It was distributed to the respondents to seek information and attain reliability of the study to gather secondary data the researchers consulted various Economics books, Retail Management and Marketing Books, magazines, newspapers, publish and unpublished thesis. Through the internet, the researchers also gathered related studies on the effect of LCC Market Plus in the retailing businesses.

Endnotes