Inflation Surge: A Phenomenological Study of the Effect of Inflation on the Sales of “Sari-

sari” Stores

CHAPTER 1
THE PROBLEM AND ITS BACKGROUND

Introduction
As inflation gradually rises, “sari-sari” store owners tend to look for several reasons on
how they can handle the sudden change in their economic environment. As such, it has been quite
difficult for “sari-sari” store owners to preserve both the customer and their own financial
stability’s satisfaction.

This study tackles how inflation impacts the demand for sales performance of “sari-sari”
stores, both in terms of customers' expectations and the actual sales achieved by the store owners.
Inflation's relentless surge has a lasting effect on the Philippine economy mainly affecting micro-
entrepreneurship. According to SunStar Philippines, when inflation soars high, “sari-sari” stores
run low, providing a lifeline of essential services to around 94% of Filipinos nationwide. (Study
reveals sari-sari stores help Filipinos amidst inflation, 2024).

Uncontrolled inflation makes it difficult for “sari-sari” store owners to sustain their product
costs and sales. According to Philstar, the data they obtained from their intelligence tool Sari IQ
saw that the "sari-sari" store inflation rate had averaged 15.6 percent, 4.4 percent greater than the
official food inflation rate of 11.2 percent reported by the PSA in January; “Based on our findings,
the pressure on owners to raise their markups and profit margins could have resulted in the higher
inflation rate experienced by “sari-sari” stores.” (Bernardo, 2023). This impacts the store's actual
sales as customer demand decreases. Customers may expect to spend less when prices rise, which
could cause them to cut back on their purchases or look for less expensive options.

Marketing has become an essential part of any business plan, especially for small scale
businesses like “sari-sari” stores as it helps them to catch a highly competitive market. Because
these “sari-sari” stores sell slightly different products, it becomes important for them to employ
competitive marketing strategies in order to get higher sales. The success of these businesses relies
on how well the owners market their products and how much effort they put in to remain
competitive.

According to IJMERI JOURNAL, owners must summarize the importance of sustainable

marketing strategies for micro, small, and medium enterprises (MSMEs) to secure business
sustainability profitability. (Ujano, 2024). Efficient distribution networks and access to quality
goods at reasonable prices ensure competitive pricing and affordable options; Through this, we
seek to learn how to manage the rising costs and enable customers to cope with the impact of
inflation on their budgets. (Bernardo, 2023). Despite the continuous inflation, some stores manage
to adjust to this circumstance by adjusting their prices, offering discounts, or changing the products
they sell to remain profitable.

Moreover, a study was conducted to determine if there is a non-linear or asymmetric output

response to oil price movements and examine which economic sector in the Philippines is the most
vulnerable to oil shocks. (Deluna, 2023). He stated that the Philippines has the most vulnerable oil
shocks, causing the cost of every goods or product to rise.

This will determine if the “sari-sari” store owners can keep up with the sudden spike in the
product's costs, as constantly displaying affordable options for every customer will be demanding.
Consequently, inflation affects the desired and actual sales of sari-sari stores and how merchants
handle the price of the product so they will need to develop marketing strategies in order to keep
up with the uncontrolled environment in the business industry. In that case, we aim to discover
how “sari-sari” store owners develop effective business programs to cope with inflation.

“Sari-sari” stores are endemic to the Philippines. It is the lifeblood of urban and rural
communities. (Lu, 2024). Therefore, we want to recognize the solutions that they used to cope
with the inflation that's been affecting the “sari-sari” store owners. “Sari-sari” stores are important
facets of the community where the trade of basic needs is sold at the smallest retail quantity. (Lu,
2024). Because of that, “sari-sari” store owners must learn and understand how to properly price
certain items in a way that will minimize the impact of the high price increase of products on their
financial status.

Rationale of the Study

The objective of this study is to investigate how inflation affects “sari-sari” store sales by
analyzing the lived experiences of store owners. Inflation, as we know, increases the cost of goods,
reduces consumer purchasing, and compels small businesses to adjust their pricing and inventory
strategies. Gaining insights into how inflation impacts “sari-sari” businesses is crucial because
these stores serve important and accessible everyday goods for local people. Therefore, it is
essential to have a deep understanding on how inflation affects their sales.

According to Ballogan et al. (2023), small retailers in the Philippines, particularly “sari-
sari” store owners, face significant challenges such as rising supplier prices and shifting consumer
purchasing behaviors due to inflation. Similarly, a report by The Asset highlights that despite these
economic hurdles, “sari-sari” stores continue to thrive by adapting their pricing and sales strategies
to meet consumer demand. (Philippine ‘sari-sari’ stores thrive amid inflation, 2024).

This research also intends to investigate the difficulties faced by store owners, such as
rising supplier prices, and shifts in customer purchasing behavior. It also seeks to examine the
different strategies they employ and adopt to keep pace with inflation, including modifying prices,
or giving discounts to consumers. Overall, by focusing on the personal experiences of these
entrepreneurs, this research provides a more thorough understanding of the effects of inflation on
micro-enterprise.

The USDA Foreign Agricultural Service reported that despite inflationary pressures, the
Philippine food retail market grew by eight percent in 2023, driven by domestic demand and
modern retail expansion. (Philippines: Retail Foods Annual, 2024). Additionally, the World Bank
noted that the country’s economic resilience is supported by a large, young consumer base and
urbanization trends, further influencing the adaptability of “sari-sari” store owners in an
unpredictable economic environment. (The World Bank in the Philippines, 2024).
Theoretical/Conceptual Framework
This study is anchored on Financial Sustainability Theory (Ozili, 2023), which highlights
how businesses or organizations can maintain steady financial performance over time, even in the
face of economic challenges. The theory presents a comprehensive understanding of the behavior
and actions of economic agents towards sustainable finance. Key principles include having a stable
income, using resources wisely, managing risks, working with others, and planning for the future.

In the context of “sari-sari” stores, Financial Sustainability Theory suggests that store
owners may adapt strategies from their peers in developing a new course of action, policy or
strategy to achieve its sustainable finance goals. Another implication is that the level of effort put
into sustainable finance reflects its priority. Store owners modify pricing and inventory based on
how much they prioritize financial sustainability. Moreover, another perspective suggests that store
owners can influence economic agents to make a decision on whether to collaborate or support
one another for the purpose of having sustainable finance.

This study highlights how financial sustainability is directly linked to business operations,
demonstrating that proper money management and sustainable investments are key to long-term
success. By effectively managing finances and making responsible investment choices, businesses
can enhance their growth and contribute to society.

Financial sustainability is significant in this study as it addresses the use of money and
resources wisely in day-to-day activities when facing economic and environmental challenges.
Furthermore, this study aids in data collection and analysis through its connection of financial
sustainability open questions with those of more high-level discussions such as sustainable
finance, and responsible money management. Lastly, it aims to reach the people of the community
particularly the store owners by assessing the marketing needs of the “sari-sari” store, as well as
their marketing capability.
 Profile of the “Sari-sari” store
“sari-sari” store owners stabilize
owners their financial
status and the
• Demand Data collection
customer’s
of sales using open-ended
satisfaction by
• Location questionnaires
recognizing the
• Financial technique of
status proper pricing for
• Supplier retail products.

Figure 1. Conceptual Framework

Statement of the Problem

This study seeks to investigate how “sari-sari” store owners balance customer satisfaction
and financial stability in the face of inflation. This study aims to explore the specific strategies that
are being adopted and employed by sari-sari store owners in Bagong Silang, Caloocan City to
ensure their store’s financial sustainability amidst the inflation, and how these adjustments affected
the accessibility of necessary goods within the local community.

Specifically, this research seeks to address the following questions:

1. What are the most challenging concerns in balancing customer satisfaction and financial
stability during inflation?
2. How do store owners decide whether prioritizing either customer satisfaction or financial
stability?
 3. What are the perception of the impact of inflation on customer's satisfaction & behavior?

Significance of the Study

The result of this research is deduced to help the following:

Small Business Owners: By understanding the customer’s behavior in purchasing, small business
owners will gain ideas focusing on improving their communication style when facing a
customer.
Suppliers: A better grasp in managing stocks in the face of inflation would help suppliers make
their action plan. When demand of sales arises, suppliers will know how to disseminate
retail products fairly and consistently.
Entrepreneurs: Handling finance budget will be crucial in managing business. This research will
provide a significant help to young entrepreneurs who needs to understand how to sustain
their budget financially in critical times such as inflation.
Policymakers: Policy makers can use the results of this study to shape the economic environment.
Policy makers may consider recognizing emerging issues such as inflation and
incorporating the results of this research to further improve already existing policies such
as monetary policies.
Customers: This research will provide a better understanding for consumers who constantly panic
buys when a certain issue or event comes. By highlighting the positive and negative effects
of their consuming behavior, customers will be aware of their decisions about their
consuming activities and better manage their buying commitments in the face of sudden
emergencies.

Scope and Delimitations of the Study

This research explores how “sari-sari” store owners in Bagong Silang, Caloocan City
address the challenges of balancing customer satisfaction and financial sustainability in the face
of rising inflation, focusing on the year 2024-2025. The primary goal of this study is to gain insight
of the strategies utilized by these small business owners to maintain profitability while ensuring
their customers satisfaction amidst the inflation. This involves examining pricing strategies, stock
management, and cost-cutting measures.

However, psychological factors such as “sari-sari” store owners’ physical and mental
health conditions will not be within the control of this study. Moreover, the study will not cover
large retail corporations such as SM Malls, Pure Gold, and other similar establishments. This
research will only cover Bagong Silang, Caloocan City, and the findings may not be applicable to
other cities or regions. Furthermore, this study will be limited to the present academic year in 2024-
2025 and the outcomes may not be relevant to future years.

Definition of Terms
For better clarification and understanding of the terms related to this study, the following
terms are defined conceptually and operationally:

Customer Satisfaction. Refers to how “sari-sari” store owners handle the price of the
product in response to rising inflation while developing new strategies that will satisfy the
customers’ expectations
Financial Sustainability. Refers to how “sari-sari” store maintains their financial budget
and at the same time, satisfying the needs of their customers.
Financial Sustainability Theory. How store owners modify pricing and inventory based
on how much they prioritize financial sustainability
Inflation. Refers to an uncontrolled and continuously rising phenomenon that will affect
mini business establishments such as “Sari-sari” stores.
Merchants. Refers to the owner of “Sari-sari” store.
“Sari-sari” Store. Refers to a business establishment located close to people, making it
convenient for people to buy their personal needs.
Small Businesses. Refers to “sari-sari” store owners.
Suppliers. Refers to people/establishments where “sari-sari” store owners get their stocks
for their store.

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