Carrefour shifts strategy with Taipei hypermarket

Carrefour Taiwan, which operates the nation's largest hypermarket chain, formally opened its 32nd outlet in Taipei yesterday, as the retailer fine-tunes its selection of store locations in order to compete head-to-head with rivals RT-Mart (大潤發) and Far Eastern Geant (愛買吉安).

The new outlet, near the Core Pacific City Mall (京華城), is part of the company's strategy to move the battle toward city-center areas from suburban regions amid cutthroat competition among hypermarkets.

Carrefour's new strategy raised eyebrows following statements Tuesday by Douglas Hsu (徐旭東), chairman of Far Eastern Group (遠東集團), the parent company of Geant, that he had been in talks with Ruentex Group (潤泰集團) Chairman Yin Yen-liang (尹衍樑), owner of RT-Mart, to discuss a possible merger of their hypermarket businesses.

Carrefour generated more than NT$50 billion (US$1.52 billion) in sales last year. The retailer currently has two-thirds of its outlets near city centers and the remaining one-third in suburbs.

"We are very flexible in selecting possible locations for new outlets. In densely populated areas, customer spending capability is also higher," said Allan Tien (田中玉), spokesman for Carrefour Taiwan.

"Compared with Taipei, the competition in Taichung and Kaohsiung is even fiercer. Especially in downtown Taichung, 12 hypermarkets are scrambling for market share," Tien said.

Easy access and adequate parking are important for downtown stores, according to consumers.

"I enjoy shopping here because I live nearby and can come here on weekdays to avoid crowds," said a housewife, surnamed Wu, who was pushing a full cart of fresh food and home appliances at the newly opened Carrefour yesterday.

Another consumer said it is really convenient to have a hypermarket near her house. "I already bought stuff yesterday and came again today to shop for my friends," Carol Wang (王慧馨), a saleswoman in her thirties, said.

Hypermarkets popping up near city centers have raised concerns that traditional markets and supermarkets might get squeezed out, but a market watcher said that each category's different features leave each type of market room to develop.

"Taiwan has the highest density of hypermarkets among Asia-

Pacific countries, with one such outlet for every 229,000 people.

"Nearly 50 percent of families spend more in hypermarkets than they do at other types of food retailers," Jennifer Wang (王琇姿), senior manager at AC Nielsen Taiwan's retail measurement services, said.

According to a report issued yesterday by AC Nielsen Taiwan, 54 percent of Taiwanese household spending is on fresh foodstuffs, such as seafood and vegetables, and 80 percent of people visit traditional markets to make purchases, Wang said.

The 2004 ACNielsen Shopper Trends survey was conducted among 15,000 people aged between 15 and 65 in 14 Asia-Pacific nations.

The government's effort to promote an updated image of traditional marketplaces has also helped boost customer traffic there, according to Wang.

"Therefore, hypermarkets need to put effort into increasing the variety of fresh food available, as this is the key to increasing customer visits," she said.

Tien agreed, saying, "This is an important link in the sector. It will help bring back customers every one or two days," different from the weekend-visit concept emphasized by rivals.