Nikomart introduces credit-card shopping

Taiwan Nikomart Co (福客多), the nation's fifth-largest convenience store operator, took the lead in introducing a credit-card payment mechanism for pre-paid products to its 355 outlets nationwide, setting its sights on the potentially highly lucrative e-commerce market.

Starting today, Nikomart will allow consumers to use Visa credit cards to purchase pre-paid merchandise, which usually retail at higher prices, including designer brand products, tour packages and Mid-Autumn Festival gift boxes.

"Customers usually feel that it is inconvenient to use cash when buying goods priced more than NT$500 (US$15.60) because they have to withdraw money from automatic teller machines," said Fred Chan (詹景超), the company's general manager, at a press conference yesterday.

According to the shopper-trends report released by research firm ACNielsen Taiwan yesterday, Taiwan has surpassed Japan to have the highest convenience-store density in the Asia Pacific region, with every store serving 2,800 people.

Average visits

Eighty percent of urban grocery household shoppers in Taiwan visit a convenience store each week, with the average number of visits reaching 14 per month, the report said.

However, all the nation's 8,000-strong convenience stores only trade in cash, considering the need for speedy transactions.

Now, with the help of the new payment tool, Nikomart plans to expand its product mix from food, drinks and daily necessities to cover higher-priced merchandise that is usually seen in department stores, television shopping networks and online stores.

"We're printing three to four different kinds of catalogues every month to sell festival gift boxes, beauty products, tour packages and housekeeper services. In the near future, we will also launch 3C [computers, communications and consumer electronics] merchandise, with more products to follow," said Jan Chun-ying (詹淳櫻), Nikomart's sales director.

The company expects to double its sales during the Mid-Autumn Festival buying season to NT$25 million from last year. Among these, 70 percent of the purchases are expected to be made via credit card, Jan said.

Fierce competition in the crowded and saturating convenience store sector has severely squeezed operators' gross margins and sales growth this year.

Hello kitty

Market leader 7-Eleven chain -- run by President Chain Store Corp (統一超商) -- had to invest NT$200 million on an all-store marketing campaign by using the ubiquitous Hello Kitty fridge magnets to drive up sales in May and last month. Looking at a long-term strategy, Nikomart plans to shift its focus to the fast-growing e-commerce market.

Huang Yann-jang (黃彥彰), a section chief of Nikomart's marketing department, said gross margins for catalogue-promoted merchandise could range between 10 percent and 30 percent. After deducting around 3 percent for handling fees charged on credit-card-based transactions and the costs of printing catalogues, the company can secure a much higher profit than before, he said.

Jennifer Wang (王琇姿), associate director at ACNielsen Taiwan's retail measurement services, praised the innovative payment method, saying that it can better serve consumers and will impact the competitive sector.

"I think this is very positive. Accepting credit cards can help drive up pre-paid sales and save consumers trouble. But how much company profits will be boosted depends on the product mix they offer," she said.