Tesco Stores Co Taiwan said the outlook for the nation's hypermarket sector remains positive and they are planning to open more outlets despite increasingly fierce competition.
The UK company, which entered the local market in 2000, said the sector still has plenty of room for growth and dismissed critics who say that the sector is reaching saturation.
"We plan to increase the number of Tesco outlets in Taiwan to 10 from the current six by the end of 2005," said Sarah Wu (
Tesco hopes the outlet expansion will help it grab a larger market share over the next two years.
The company takes about 4 percent of the NT$100 billion hypermarket retail market in Taiwan.
Wu said Tesco Taiwan is planning to boost its percentage of market share to nearly 10 percent by 2005.
NOT SATURATED
As Tesco expects to create a more than 10 percent increase in annual sales over the NT$4 billion it had last year, the sector is far from saturated, Wu said.
"Saturation is not a problem. What matters to hypermarket operators is how to enhance their competitiveness," she added.
This could be achieved by focusing on four areas, according to Wu: Prices, product range, services and value for money. Tesco has offered two promotions with 5 percent to 15 percent price cuts on 1,500 items this year.
In addition to the more than 45,000 kinds of products placed on the shelves, the company's executives often meet face-to-face with customers in a bid to determine their needs.
"These approaches help us to build up customers' loyalty as well as our competitiveness," Wu said.
COLLECTIVE RESPONSE
France-based hypermarket chain Carrefour also rejected local media reports that growth in the sector has slowed down.
The retailer is planning to open its 31st store in Shulin Township, Taipei County later this month, and predicts more than NT$50 billion in sales this year, up only 2 percent from a year ago, due to the outbreak of SARS earlier this year and the public's deflation concerns.
Due to concern about a tenuous economic recovery, consumers are hesitant to spend money as they prefer to wait for price cuts by retailers, which in turn hurt retailers' bottomlines.
"Hypermarket operators need to work collectively to expand the overall customer base here, instead of engaging in some kind of vicious competition amongst themselves," said Allan Tien (
Tien said operators should ponder effective methods to lure customers who are used to shopping in traditional markets to making purchases in hypermarkets.
"Sales created by traditional food markets and retail outlets reach as much as NT$240 billion annually, which is as twice large as the hypermarkets' annual sales," he said.
RSS