What will 2004 hold for the nation's computer and consumer electronics retailers? Far from being the Year of the Monkey, industry insiders predict it will be the Year of War.
"Competition between E-Life Mall Co (
TAIPEI TIMES FILE PHOTO
"Competition will continue this year and it will involve all of the nation's computer and electronics chain retailers," Huang said.
E-Life, the nation's leading consumer electronics retailer with 222 stores, and Tsann Kuen, which has 134 outlets, are offering deferred payment plans and no-interest 12-month installment programs in a bid to secure their customer base in a market that analysts and industry veterans said has reached saturation point.
Computer and consumer electronics retail chains emerged in Taiwan in the early 1990s. The establishment of Nova Plaza computer shopping center in 1987 near the Taipei Railway Station (
Over the years, the size of the computer and consumer electronics retail market, worth more than NT$200 billion, has to a virtual standstill with little space for growth, said Hsieh Wei-hsiung (謝維雄), E-life's assistant vice president of merchandise and marketing.
"Only retailers that offer customers attractive promotions, quality products at preferential prices and prompt services can make progress in this industry," Hsieh said.
Promotions, in particular, have become a must-do to boost sales.
"We found an obvious decrease in our sales during the period of no promotion activities," said Eileen Shou (
Retailers have also banked on plans to diversify their product category to woo different segment of customers and thus increase their customer base.
Take E-Life. The company decided earlier this month to team up with Hewlett Packard Taiwan in marketing HP-brand computers and peripherals, targeting young office employees. Currently, home appliances account for 90 percent of E-life's product lineup, with computers and consumer electronics making the remainder. The company may keep enhancing its electronic products to echo consumers' needs.
E-Life achieved a 35-percent increase in annual sales at NT$9.5 billion last year.
"With the new strategy, we hope to reach similar growth rate this year, with the opening of 40 more outlets," Hsieh said.
Unlike E-Life, Tsann Kuen said it would shift its focus to expanding its retail business in China.
"Eyeing the estimated 7-percent GDP growth in China, 10-percent rise in its retailing and the 30-percent increase in the electronics and home appliance market there, we plan to open more than 100 outlets in China in 2004," Wu Tsann-kuen (
Tsann Kuen started its retail business in China in the mid-2002 and has opened around 40 stores for now. It hopes to expand the outlet number to more than 160 in Taiwan and 100 in China's eastern and northern regions by the end of this year.
The group generated NT$37 billion in sales last year, an increase of about 40 percent compared to the previous year.
"We aim to create annual sales of NT$80 billion in 2004 and NT$400 billion by 2009, with 1,000 outlets on both sides of the Taiwan Strait," Wu said.
E-Life said it has no plans to get into China any time soon.
"As we are going to be listed on the stock market this September, we will put more stress on the business here in Taiwan," Hsieh said.
Regardless of what marketing strategies or promotion tactics retailers are using, the trend is toward fewer but stronger and bigger players in this industry.
"There would be no more than three major players -- who have efficient management and good control of cost -- to survive in this line of business over the next three years at the earliest or eight years at the latest," Tomorrow World's Huang said.
A strong driver behind the industry consolidation is that consumers are getting used to selecting consumer electronics and home appliances from large retailers with supportive after-sale services.
In this regard, Nova Plaza and stores located in the Kwang Hwa Market may face marginalization amid the harsh competition, Huang said.
The 12-year old Tomorrow World, which primarily sells computers and electronic products like digital cameras, saw annual sale grow 28 percent from a year ago to NT$1.8 billion last year. The company plans to expand its outlets to 70 this year on an annual sale of NT$2.5 billion.
"Retailers that cannot keep up with the three biggest companies could easily get neglected by consumers in the future no matter what promotions they utilize," Huang said. "Strong players become increasingly stronger while the weaker ones get eliminated by market forces."
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