Retailer optimism strong despite narrower margins

To break through their low-margin predicament, operators have turned into landlords by leasing retail space in their shopping malls.

"The mega mall concept will be the future trend as people nowadays prefer one-stop shopping," and rental income could make up for shrinking margins, said Wendy Yang (楊文婷), marketing director of Far Eastern Geant (愛買吉安).

Spacious, brightly lit sales areas and the inclusion of several upscale fashion brands have also become must-have features to cater to quickly changing customer demand, she added.

Far Eastern Geant, for instance, has Burberry and Calvin Klein strengthening its image.

DEPARTMENT STORES

Compared with the hypermarkets' relatively quiet expansion plans, the department store sector is quite active, with three new stores opening last year and at least another three to join the battle this year.

Breeze Center's (微風廣場) second mall opened last June, followed by Shin Kong Mitsukoshi Department Store's (新光三越) A4 outlet in September in Taipei's glittering Xinyi district as well as Global Mall (環球購物中心), developed by construction firm Kindom Group (冠德企業), in Jhonghe (中和), Taipei County, last month.

This year, Eslite Corp's (誠品) new store was inaugurated on New Year's Day, with Pacific Sogo Department Store's (太平洋崇光百貨) new location in the capital and the Uni-President Group's (統一集團) Dream Mall (夢時代購物中心) in Kaohsiung to launch later this year.

Believing the government will push through more economic stimulus policies, Alex Ro (羅仕清), vice president of Pacific Sogo, said he is optimistic about the market despite the competition. Sogo's short-term plan is to open a new outlet every year in Taipei until 2009, he said.

SinoPac's Lee said the conglomerates' substantial investment has been made on the assumption that the government's three-links policy will be relaxed in the near future to allow more Chinese capital and people into Taiwan.

"As long as the economy sees sustainable growth, with Taiwan's ties with China gradually improving, it's a natural strategy for them to continually cast nets for the bigger fish ahead," he said.