Mon, Aug 14, 2006 - Page 12 News List

Carrefour still upbeat on hypermarkets

CONFIDENT The nation's largest organized retailer expects to continue growing at the expense of traditional markets and take on a hard discounter in the future

By Jackie Lin  /  STAFF REPORTER

After taking over smaller rival Tesco in June to secure its market leadership, Carrefour Taiwan is planning to take on Pxmart (全聯社), the nation's sole "hard discounter," in five years when growth in the hypermarket sector slows down.

With 43 stores nationwide, including Tesco's six outlets, Carrefour accounts for the lion's share, or 46 percent, of the domestic organized retail industry.

It aims to add another five stores by year-end, and has set a sales target of NT$70 billion (US$2.1 billion), from NT$55 billion last year.

"Compared to Europe, where the store density is one hypermarket for every 50,000 people, Taiwan still has a large room for development with one store per 200,000 people," Carrefour spokesman Allan Tien (田中玉) said last Friday.

Apart from edging out their rivals by slashing commodity prices and offering guaranteed services, Tien said that hypermarkets would continue to grow at the expense of the traditional market, which rakes in an estimated NT$250 billion in annual sales.

As such, Carrefour would stick to its aggressive marketing strategy, aiming to have 80 stores in operation by 2010 before introducing its second business model from Europe to compete with Pxmart, he said.

Pxmart, characterized as a grocery discounter with general merchandise and dry goods as its major product mix, has around 300 stores nationwide.

Its retail prices are 10 percent to 15 percent lower than those in hypermarkets and 20 percent to 30 percent cheaper than those in supermarkets, according to the company's Web site.

Pxmart has said that it plans to expand to more than 500 stores, but did not give a timetable. Carrefour, however, shrugged off its smaller rival's plans.

"It's much easier to open a hard discounter, which only requires a sales area of 30 ping [100m2], and we've got the know-how. When the time comes, we can quickly duplicate our European experience to compete head-on with Pxmart by opening similar stores right next to its outlets," Tien said, adding that the ensuing competition would be similar to that witnessed in the local convenience store sector.

Meanwhile, RT-Mart (大潤發), the nation's second-largest hypermarket chain, introduced a new store format -- the drive-through model -- in the local market in June last year.

Based on the fastfood business' drive-through model, RT-Mart's Taoyuan outlet takes up less space at 300 ping and stocks 700 to 1,000 items.

Instead of shopping inside, consumers choose products using a touch screen installed outside the warehouse and then pay the bill. Within minutes, RT-Mart staff will pick up the items and load them in the shopper's vehicle.

However, this new business practice has yet to catch on.

"We're still testing the waters and adjusting the product mix to meet consumer demand," said RT-Mart president Kaufmann Wei (魏正元) during a telephone interview yesterday.

He did not give a timetable as to when more drive-through stores will be opened, but hinted that he was mulling the possibility of introducing other business models into the country.

Wei added that RT-Mart is scheduled to open a mega store in Sinjhuang (新莊), Taipei County, next year, bringing its store number to 24.

As for the No. 3 player, Far Eastern Geant (愛買吉安), turning losses into gains remains its priority.

The company will focus on its hypermarket operations and has no plans of branching out into new store formats, according to its marketing director Wendy Yang (楊文婷).

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