Consumers to benefit from mall wars

The ongoing battle between two rival department stores has created cut-throat competition, with one retailer looking to steal customers by accepting the other's membership credit card.

Taipei's Breeze Center Mall (微風廣場) is offering discounts and freebies to Sogo Department Store (太平洋崇光百貨) cardholders starting today, a senior Breeze executive said yesterday.

While the rivalry between the two has so far been fairly low key, Breeze spokesman Jason Tsai (蔡明澤) said "its not under the table anymore ? this is an in-public, head-to-head battle."

Between today and July 21st, Sogo membership cardholders can enjoy a 10-percent discount at nearly 90 percent of stores and restaurants in the mall as well as free parking. The incentives are the same as those enjoyed by Breeze cardholders.

Tsai intends to attract 50,000 Sogo shoppers, and he predicts that the amount of credit card usage will increase by 10 percent.

The competition for consumers began in October of last year when Sogo asked its vendors to sign a contract promising not to set up shops within 2km of its department store -- a zone which just happened to include Breeze.

As a result, Breeze was unable to attract several major stores and filed a complaint with the Fair Trade Commission.

In May, the commission concluded in a report that Sogo was unfairly hampering market competition and was fined for NT$2.5 million.

Sogo, dissatisfied with the decision, has since chosen to appeal the ruling.

With recession-weary consumers fussy about where and when they pull out their pocketbooks, one market watcher said that new market entrants have little choice but to try to hijack customers from other locations.

"Since the retail market size isn't expanding because of the economic downturn, Breeze has to steal customers from other shopping centers to survive? and Sogo is the closest target," said Bei Lien-ti (別蓮蒂), associate professor of business administration at National Chengchi University.

Sogo reported NT$16.2 billion in sales last year. Breeze, which opened in October of last year, has estimated NT$5 billion in sales for its first year.

From a marketing standpoint, the new strategy may work.

"This practice may boost Breeze's customer traffic, but the impact on sales remains to be seen," she said.

Product selection will be a key incentive for customers.

Cynthia Chang (張瑾瑜), 28, who works for a trading company and is a Sogo cardholder, said, "Even if they offer a discount, they don't sell my favorite brands."

A Sogo official said the store remains confident.

"We've been in the market for 15 years...customers may take a look at Breeze, but eventually they will come back," said Sogo Vice President Lee Kuang-rong (李光榮).