In a notable shift, SM Investments Corp., the leading retail conglomerate in the Philippines, has observed an increasing trend where Filipino consumers are prioritizing expenditures on fashion, health, and beauty products over basic necessities such as food. This trend is anticipated to persist through 2025, driven by a renewed enthusiasm for social activities and entertainment following the pandemic. The company reported significant growth in non-essential categories, with fashion and health/beauty sales outpacing food sales. In 2024, these sectors saw double-digit growth, setting a positive tone for the coming year.

The head of investor relations at SM Investments, Tim Daniels, highlighted that post-pandemic consumer behavior has shifted towards more discretionary spending. People are eager to engage in social outings, dine out, and enjoy entertainment experiences, which has led to increased retail spending on clothing and personal care items. This change in spending patterns became particularly evident in the latter part of 2024, especially during the holiday season when non-essential sales surged. Fashion revenue grew by 14% in the fourth quarter, while health and beauty product sales climbed by 13%, contributing significantly to the overall 7.8% growth in non-essential sales for the quarter.

Daniels also noted that this momentum propelled SM Retail's overall fourth-quarter sales to an 8% increase, marking the fastest growth rate in four quarters. For the full year, SM Retail's revenue rose by 5%, reaching P435 billion, with the food segment contributing P253 billion. The remaining revenue came from department stores and specialty shops focused on non-essential goods. The executive vice president of SM Investments, Franklin Gomez, attributed this performance to record-low unemployment and steady remittance growth, which have bolstered consumer demand and spending patterns.

Despite inflation challenges, household spending picked up in the second half of 2024, signaling a recovery in consumer confidence. While full-year consumer spending growth lagged slightly behind historical trends, the fourth quarter's robust performance set a promising tone for 2025. The consistent double-digit growth in health and beauty sales throughout 2024, coupled with accelerating fashion revenue starting from the second quarter, underscores the resilience and evolving preferences of Filipino consumers. As other non-essential categories like kids' and home products also showed signs of recovery, the outlook for the retail sector remains optimistic.

The strong finish in 2024, particularly in the fourth quarter, reflects not only a surge in holiday shopping but also a broader shift in consumer priorities. With low unemployment rates and continued remittance growth, the retail industry is well-positioned to capitalize on this momentum. The growing interest in fashion and personal care products suggests that Filipinos are increasingly valuing experiences and self-care, indicating a positive trajectory for non-essential retail sales in the coming year.