Taipei Times: How has Jasons performed so far?
Alex Tay (
PHOTO: GEORGE TSORNG, TAIPEI TIMES
TT: Japanese-style supermarkets have long dominated this sector in Taiwan. Why do you think that Jasons can stand out and achieve first-year sales of more than NT$500 million?
Tay: Despite strong, long-term influences from Japan, we see a big niche market for new conceptual supermarkets like Jasons to develop here in Taiwan. While it's not an easy job to run a supermarket that sells quality goods at higher unit prices, we do have some relevant experience -- including running Jasons in Singapore for more than 30 years and Oliver supermarket in Hong Kong for more than 20 years. In addition, as part of Dairy Farm International Holdings Ltd, we are the only Western-style supermarket in town, not to mention that our location at Taipei 101 is perfect.
TT: Following the acquisition of rival Huey-Yang Co's (
Tay: We launched our first Wellcome store in Taiwan in 1987 and expect to open our 155th outlet by the end of this year. And we will definitely open as many outlets as possible, mainly in northern Taiwan. We plan to open larger stores in the south instead of the small stores you now see in the north. Our edge in outlet locations greatly benefits our business. It is not easy to find ideal locations to open new outlets. Thanks to our early entrance into the market, we have more than 130 stores solely in the greater Taipei area, the most prosperous business region in the country.
TT: Why have different store formats?
Tay: Every industry has to keep changing over time, including the supermarket sector. That's why we have set up different store formats. Apart from the exclusive Jasons and the conventional Wellcome stores, we have developed other store formats -- Super Store and Wellcome Plus. Super Store features a higher proportion of fresh produce while Wellcome Plus boasts over 300 items of imported produce. We've opened two Super Stores in Taipei and one more will be launched by the end of the year. As for Wellcome Plus, we have launched several such outlets in Tienmu, Yangmingshan and Ilan's Lotung, where many foreign missionaries live. Before bringing in Jasons here, we were developing Wellcome Plus on an experimental basis and this format was well received by foreign communities.
TT: Will traditional markets gradually disappear and be replaced by supermarkets in Taiwan and other Asian countries?
Tay: Instead of disappearing, traditional markets will continue to survive, as we have seen in Kong Kong and Singapore. Traditional markets are part of Asian culture. This also applies to Taiwan, where up to 80 percent of female customers still think traditional markets offer the freshest produce.
Even so, we still wanted to bring the Super Store format here because we aim to offer a cleaner location that provides produce as fresh as that in traditional markets. I believe the Super Store format will be the trend of the future in Taiwan.
TT: Are there any supermarkets even more upscale than Jasons?
Tay: Yes, we use the word "gourmet" for this type of supermarket, which sells only fresh produce and fine wine. Oliver supermarket in Hong Kong is one example of this format, which not only offers customers food delicacies and wines but also a chic lifestyle. We think Taipei has the potential to support this kind of supermarket, with Tienmu an appropriate location.
TT: Is the supermarket sector facing growing competition from other retail sectors, such as hypermarkets and convenience stores?
Tay: We can see from the latest government statistics that the supermarket sector is indeed being challenged by other retail sectors. As of the end of September, department stores accounted for more than 30 percent of general merchandise retailing while hypermarkets seized 25 percent of the market. Convenience stores continue to grow and have grabbed another 23 percent of market share this year, up from 19 percent in 1999. The supermarket sector saw its share narrow to 12.7 percent from 14 percent two years ago.
TT: If it's true that the supermarket sector is being squeezed by others, what do you think the prospects are for the sector?
Tay: I think there is space for supermarkets to develop here. Based on the experiences of other Asian countries, the supermarket industry is a stable one that will continue to exist. Though hypermarkets provide one-stop shopping convenience, consumers do not drive all the way there just to buy a bottle of milk. Convenience stores offer convenience but don't have enough variety to fulfill a family's needs. Supermarkets can exist as a niche market.
Actually, the supermarket sector has seen a 6 percent increase in sales so far this year, as more people chose to shop at supermarkets during the period of SARS in the second quarter. The withdrawal from the market of other retailers, such as Makro, has also helped boost this year's sales.
TT: But judging from the fact that new shops are opening at a slower rate than in the recent past, don't you think the market has become saturated?
Tay: Taiwan's market became saturated two years ago. Why? Because different kinds of retailers were developing almost simultaneously in Taiwan, something that had never happened before, here or abroad. According to government statistics, the growth rate of the overall retailing market this year dropped to around 2.4 percent from last year's 5 percent. As a result, any player's gain in the market is another's loss. But business operators must expand.
In my opinion, the market will enter a consolidation stage in the next two years, and there will still be room for supermarket growth after some players, particularly hypermarkets, withdraw from this competitive market. Actually, with customers' sense of the novelty of one-stop shopping fading away, hypermarkets, which require great investments, may start to encounter declining sales.
TT: Compared to your experiences in countries like Singapore and Hong Kong, what are the unique requirements for operating supermarkets in Taiwan?
Tay: Running supermarkets here in Taiwan is a tougher job for business operators than in other countries because Taiwan's retailing took a different path of development from other countries. In most countries, traditional groceries appear at the early stages, followed by mini shops and supermarkets, hypermarkets and then convenience stores. Singapore and Hong Kong's retailing matched this pattern but Taiwan's did not.
In Taiwan, all these retailers sprang up at the same time after the opening-up of society following the end of martial law [in 1987]. Retailers here thus faced harsher competition than did those in other countries, and the survivors include Wellcome Taiwan, Carrefour Taiwan Co and President Chain Store Corp's (
TT: How do you distinguish Wellcome from your competitors, such as Sungching (
Tay: In the face of keen competition, only retailers like 7-Eleven, which are able to create added value based on convenience, can achieve success.
The establishment of brand value is also a priority. Only branding makes us stand out from our competitors. We also launched an e-shop service in March this year. This is expected to help extend our service to customers because we will be able to provide more choices of goods online.
Fresh food is another area that we have been managing to perfection. With economy of scale, we are able to provide quality fresh produce at lower prices, which differentiates us from rivals.
But the secret of successful service lies in action and determination. People working in the supermarket sector are all hard workers but limitations on their quality still exist. To make up for this, we put a lot of effort into staff training.
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