The sudden closure of cosmetics and beauty products chain store Ming Chia Mei (MCM, 名佳美) has sparked industry consolidation in a sector in which more than 10 local and foreign brands compete with each other for a share of Taiwan’s market.
The Greater Tainan-based Ming Chia Mei, with a network of 12 outlets nationwide, announced on Sunday that it would immediately terminate its business to alleviate company chairwoman Lu Ching-yen’s (呂青燕) financial difficulties.
Chinese-language media reported yesterday that competing brand Mirada (美華泰), which is headquartered in Taipei, planned to take over some of Ming Chia Mei’s stores to strengthen its position in this highly competitive market.
However, Mirada has secured only a small slice of the market as the business of cosmetics and beauty products in Taiwan is both crowded and fragmented, with major brands including Watsons, Sasa, Cosmed (康是美), Poya (寶雅), J-mart (佳瑪) and Seasons (四季). Competition from online shopping is also increasing.
“Mirada currently has 14 stores in Taiwan, and while its store count will increase after the acquisition of MCM stores [to 26 stores if it retains all 12 MCM stores], its scale will remain smaller than Poya’s,” Yuanta Securities Co (元大證券) analyst Bonnie Chang (張文慧) said in a client note yesterday.
Poya operates a total of 88 stores, selling cosmetics, beauty products, personal goods and lingerie, as well as household groceries, while market leader Watsons has 471 stores nationwide and Cosmed operates more than 355 outlets, according to the companies’ Web sites.
Chang said the closure of Ming Chia Mei offers more growth opportunities for Poya as the retailer could open new stores at its former competitor’s sites, if these locations offer favorable traffic and reasonable rent.
“This industry consolidation supports our positive view of Poya’s competitiveness, which has enabled it to grow its business over the past 10 years, while its competitors continued to fall behind,” Chang said in the note.
Poya’s consolidated revenue stood at NT$1.36 billion (US$44.8 million) in the first two months of the year, up 24.05 percent from the NT$1.1 billion posted the previous year, company data showed
Shares in Poya fell 1.03 percent to NT$193 yesterday, up 102.52 percent over the past 12 months, data from the GRETAI Securities Market showed.
The over-the-counter benchmark index has increased 26.76 percent over the same period.