Hypermarkets expect to sustain strong growth

A improved economy and price-cutting strategies are expected to help the hypermarket sector maintain the strong growth seen in the first quarter, while convenience store operators are hoping for fair weather and introducing more services to give their flat revenue growth a shot in the arm, industry veterans said yesterday.

"As the economy improves, consumers return to retail venues and they might feel no difference spending NT$10 more each time," said Allan Tien (田中玉), spokesman for the nation's largest hypermarket chain Carrefour, which reported 15 percent growth in its first quarter sales.

Immediate effect

Considering customer traffic in the retailer's 34 outlets usually hits 200,000 to 300,000 people a day, shoppers' less cautious attitude in spending when the economy improves immediately translates into bumper sales for retailers, he added.

According to figures released by the Ministry of Economic Affairs late last week, the hypermarket sector reported NT$13.9 billion in revenues in January, partly boosted by Lunar New Year buying. This represents a big jump from NT$10.5 billion in November and NT$11.5 billion in December.

The sector last year was battered by news reports that flawed household appliances had been sold by hypermarkets, undercutting consumer confidence as well as total annual sales.

Kaufmann Wei (魏正元), president of RT-Mart (大潤發), said discounters would have to make more efforts to offer a more complete product mix and lower prices to keep revenues growing.

RT-Mart, a Taiwanese-French hypermarket venture, posted 20 percent growth in sales between January and March.

Monthly sales in the saturated convenience store sector, however, have fluctuated at around NT$13.5 billion over the past few months, although new outlets were opened every week.

According to ministry figures, convenience store chains reported NT$13 billion in sales in January, down 2.43 percent from the previous month, while the entire retail sector (including department stores, supermarkets and hypermarkets) posted 2.26 percent growth over the same period.

Yeh Jung-ting (葉榮廷), vice president of the nation's second-largest convenience store chain, Taiwan FamilyMart Co (全家便利商店), attributed the slide in first-quarter performance to bad weather. Single-store sales dropped by 2 percent year-on-year in the first three months, Yeh added.

Stormy weather

"Cold or rainy weather discourages customers from buying drinks, which constitute nearly 30 percent of our stores' product mix," he said.

Although weather will continue to play a major role in these companies' fiscal performances, Yeh expects Taiwan FamilyMart to post double-digit growth from last year's NT$27.3 billion, by creating consumer demand and opening another 150 outlets throughout the nation.