After enjoying a year of marked revenue growth and challenges from several newcomers, retailers will have to guard against the possible fallout of rising consumer prices as their performance this year is expected to only maintain the status quo.
"There will be no substantial increase in retailers' sales from last year," said Neo Lee (李承瀚), a researcher with SinoPac Securities Corp (建華證券).
"As long as there are no unexpected events like the SARS epidemic in 2003 or a sudden economic slump, the retail sector will not experience big changes this year," he said.
Hypermarkets, convenience-store chains, department stores and other retailers together created NT$570 billion (US$18 billion) in sales for the first 10 months of last year, or a 7.64 percent increase from the same period in 2003, according to figures released by the Ministry of Economic Affairs last month.
But Lee predicts that rising consumer prices -- not a looming economic slowdown -- will eat into retailers' profits this year.
The Consumer Price Index rose 1.62 percent for the whole of last year, the highest level since 1998, when it was 1.69 percent, the Directorate General of Budget, Accounting and Statistics reported on Wednesday. The agency predicted 1.88 percent growth in the index this year.
"Price increases will create a `crowd-out' effect in household consumption as consumers will be forced to restrain unnecessary spending," Lee said.
While a combination of new mega-stores and easier access to credit had raised hopes of higher revenues for large discounters last year, the result was rather disappointing.
hypermarkets
For the first 10 months, hypermarkets posted NT$117 billion in total sales, down 1.17 percent year-on-year, according to the ministry's statistics.
"Retailers weren't adding stores at the pace they used to," said Jennifer Wang (
"On the other hand, the slowdown in adding stores pinpoints a hidden concern over the government's land-zone regulations," Wang said.
Echoing Wang's view, Kaufmann Wei (
Looking ahead, pressure on discounters from higher materials prices is imminent, which will erode gross margins as competition heats up.
"Developing more own-brand products and expediting mass procurement should be the way out, and to secure the biggest profits," Wei said.
Jeff Lai (
For convenience-store chains, the compeitition is even more cutthroat.
convenience stores
Industry veterans estimate that there will be more than 8,000 convenience stores serving the country this year, meaning each outlet will serve fewer than 3,000 customers, mirroring the situation in Japan.
Indeed, the net increase in convenience stores saw the biggest jump in 1999, when 1,002 new stores were opened, resulting in an annual growth rate of 25.38 percent.
But growth slowed to 9.06 percent in 2003, when 554 new outlets were opened for business, the Fair Trade Commission reported in November.
With a shrinking customer base, convenience stores just need to do more to keep customers, said Yeh Jung-ting (葉榮廷), vice president of Taiwan FamilyMart Co (全家便利).
Taiwan FamilyMart has expanded its product mix, including the introduction of pre-paid Lunar New Year dishes to serve those who don't want to cook the dishes themselves.
"Convenience stores must endeavor to change consumer behavior because creating brand-new demand is very difficult," he said. "Nevertheless, we want consumers to come back to our stores, again and again."
Even so, Taiwan FamilyMart and other convenience chains are slowing the rate at which they are opening new shops, as a result of rising rental costs.
"Now, the priority for us is to improve overall quality and shut down poorly performing stores," Yeh said.
shopping malls
The situation was less bleak for large-scale shopping complex investments last year.
In Taipei City alone, Miramar Entertainment Park (
In southern Taiwan, Uni-President Group (
"New shopping districts will soon take shape in these areas, following the model used in Taipei's Xinyi district, which boasts the Taipei 101 Mall, Shin Kong Mitsukoshi's three branches and the New York New York mall," ACNielsen's Wang said. "A cluster of competitors in the same area can attract a bigger crowd."
But SinoPac Securities' Lee said retailers need to find a new success formula -- tapping into the Chinese market or merging with rivals -- or risk losing investors' confidence.
"Opening department stores or shopping malls requires abundant investments and those investments will take several years to break even," Lee said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”