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Test Rite may link with British giant

Test Rite International Co (特力), a partner of do-it-yourself home furnishing retailer B&Q Taiwan, may team up with the British department-store chain Debenhams Retail PLC to set up a department store in Taiwan, a Test Rite executive said yesterday.

"We've been in close talks with Debenhams for nearly six months," said Ted Chen (陳彥君), a spokesman for Test Rite Group. "The two sides are very likely to cooperate in running a department store."

Chen refused to elaborate on the details of the investment plan. He said the two parties were still studying the issue.

"We won't make a proposal at the board meeting until August," he said.

Test Rite supplies home improvement tools to leading retailers in Europe and the US, such as Wal-Mart and Home-Depot. The firm linked up with UK-based Kingfisher PLC to establish B&Q stores in Taiwan in 1995.

As of today, the 50/50 B&Q Taiwan joint venture has set up 14 stores that collectively generated NT$8 billion in sales last year, Chen said.

Test Rite intends to use the same joint-venture mold with UK-based Debenhams to kickstart its department-store business in Taiwan, he added.

The company is currently conducting market research and looking for suitable locations to open a department store.

"We don't plan to build a store by ourselves. Instead we plan to lease a space," Chen said.

Debenhams, one of Britain's favorite department stores, was established in 1905 and is positioned as a high-street department-store chain. It currently runs 102 stores across the UK and Republic of Ireland, as well as a network of franchised stores in 11 nations worldwide including United Arab Emirates, Iceland, Hungary and Malaysia.

In addition to Test Rite, Debenhams has also contacted another two retailers -- Taipei 101 Mall in Hsinyi district and Miramar Entertainment Park (美麗華購物中心) in Dachih district -- to tap into possible business opportunities in Taiwan.

"About one and half years ago Debenhams talked to us ? but we haven't had any further talks," said Simon Van de Velde, senior development, leasing and marketing manager at Lend Lease Pty Ltd Taiwan, retail leasing planner of Taipei 101 Mall. The mall is sched-uled to open in November.

A Miramar's marketing official yesterday said on condition of anonymity that last month a local company representing Debenhams asked about a leasing plan.

They didn't cut the deal because Debenhams was looking for several thousand pings of retail space, while Miramar is interested in small-scale tenants. Miramar is planning to open its businesses next year.

An analyst poured cold water on the plan, saying now is not a good time to enter the retail market.

"Taiwan's department-store market is nearly saturated," said Peter Tseng (曾耀德), an industry analyst at Polaris Securities Co (寶來證券).

Severe competition and a slow economy have left no room for new entrants to profit, he said.

Last year, most department stores reported a 4 to 5 percent sales drop from the previous year, and "outlook for this year is not optimistic," Tseng said.

And amidst continued price war among retailers, even if department-store sales increase, profits are expected to go down for sure, he added.
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