Computer retailers woo buyers

The nation's two biggest computer and electronics retailers are offering deferred payment plans in a bid to secure their customer base in a market analysts say is about to reach its saturation point.

Tsann Kuen 3C (燦坤) yesterday started a 90-day deferred payment program for credit-card holders of Chinatrust Commercial Bank (中國信託), Taishin International Bank (台新銀行) and AnShin Card Services (安信信用卡).

The electronics retail chain, a subsidiary of Tsann Kuen Enterprise Co (燦坤實業) with 124 out-lets nationwide, also launched a no-interest 12-month installment plan yesterday, a company official said.

Tsann Kuen's campaign is aimed at office employees, company spokeswoman Eileen Shou (守寍寍) said.

The offer applies to all household appliances and selected desktop computers, printers and digital cameras, she said.

Although the chain's larger rival, E-Life Mall Co (全國電子), which operates 221 outlets, has not initiated any new incentives for consumers, the retailer said it was sticking to its no-interest 12-month installment program.

"We initiated the installment program two years ago and we welcome our competitors who provide a similar service to customers," said Hsieh Wei-hsiung (謝維雄), E-life's assistant vice president of merchandise and marketing.

Tsann Kuen hopes to generate NT$100 billion in sales during the three-month promotion period, Shou said. The retailer has indicated that it wants to achieve annual sales of NT$18 billion this year, a 67-percent increase from last year.

As for E-life, the company said it hopes to reach a NT$1 billion sales figure over the next three months. This would account for 10.5 percent of its estimated NT$9.5 billion sales total for this year.

Analysts said both retailers could sacrifice profits for sales.

"This kind of promotional approach might stimulate people's desire to purchase and boost sales in the short term, but it will result in a lower gross margin," said Chen Yen-liang (陳彥良), an analyst at Yuanta Core Pacific Securities Co (元大京華證券).

Tsann Kuen has seen the decline of its gross profit ratio from 21.1 percent in the second quarter to 17.8 percent in the third quarter. The chain's gross profit ratio could drop to 17 percent in the fourth quarter following the current promotion drive.

According to Shou, Tsann Kuen turned its attention to China in June to boost its bottom line.

The company has opened 22 outlets in China and plans to increase that number to 180 by the end of next year.

Shou said she doesn't expect much expansion in the domestic retail market.

"In Taiwan, we plan to open another 26 stores by the end of 2004, which will allow us to take more than 10 percent of the NT$250 billion market here," she said.

E-Life's Hsieh agreed that Taiwan's electronics and computer market would not grow much in terms of sales.

"But we will still put most of our focus on Taiwan by offering customers lower prices and better post-sale services like lifelong guarantees on small household appliances," he said.

E-life plans to have a total of 250 outlets by the end of next year and has no plans for entering China's market in the near future, Hsieh said.