Fri, Oct 06, 2006 - Page 12 News List

Leading retailer mulling new ideas for growth

STRATEGIES Shin Kong Mitsukoshi is gradually shifting its focus to China and looking to online shopping to ensure continued growth as the home market nears saturation

By Jackie Lin  /  STAFF REPORTER

Shin Kong Mitsukoshi Department Store (新光三越), the nation's largest retailer, is mulling new business models to further tap into the domestic market because the sector is nearing saturation, company chairman Wu Tung-hsing (吳東興) said yesterday.

"We're studying the possibility of developing different operational models to fuel corporate growth after the Tsoying (左營) store in Kaohsiung opens [at the end of 2008]," he said after a cake-cutting ceremony in Taipei to celebrate the retailer's 15th anniversary and mark the start of its anniversary sales.

One key model would be the launch of online shopping as virtual retail is expected to play a major role within the next three to five years, he said.

Shin Kong Mitsukoshi currently operates 13 department stores nationwide, with the highest store density reported in the capital's Xinyi district, which sees intense competition between its four outlets, as well as Taipei 101 Mall and the New York New York shopping mall.

Its store expansion plan will temporarily come to an end when the 14th location opens in two years, which Wu said would mark its complete positioning in the country.

The company, however, is leaving the door open for further expansion if good locations are available, Wu added.

Wu said that small-scale players, if not part of a chain store, would find it extremely difficult to survive the fierce competition.

But taking over poorly performing rivals would be the last choice for the retail giant, as that would entail investing more to remodel the store in line with its shopping concept, he said.

As its business is peaking at home, Shin Kong Mitsukoshi is gradually shifting its focus to China, with the first megastore slated to be inaugurated in Beijing in the first quarter of next year.

The 50/50 joint venture with China's top retailer -- Beijing Hua-lian Group (北京華聯集團) -- will be the biggest department store in the Chinese capital, occupying a floor space measuring approximately 180,000m2.

It has roped in 60 famous designer brands, becoming its big selling point compared to its Chinese peers, Wu said.

While its second project with Beijing Hualian in Chongqing is under construction, Wu said it does not rule out the possibility of cooperating with other local partners to tap into the massive market.

But for the moment, Shin Kong Mitsukoshi is maintaining a conservative attitude toward purchasing land in China owing to the government's regulatory ceiling that caps China-bound investment at a maximum of 40 percent of a Taiwanese company's net worth.

Compared to its rival, Far Eastern Group (遠東集團), Shin Kong Mitsukoshi was a late entrant into the Chinese market.

Far Eastern started investing in China's retail sector 13 years ago by operating a dual-brand strategy, Pacific and Far Eastern department stores.

The company also owns two brands in Taiwan -- Far Eastern Department Store (遠東百貨) and Pacific Sogo Department Store (太平洋崇光百貨).

Based on its aggressive plan, the group expects to open at least one store a year in China in the near term, while launching five more in Taiwan by 2010, including three in the capital, one in Banciao and one in Taichung, said Tony Yeh (葉清水), vice president of Far Eastern.

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