Mon, Feb 12, 2018 - Page 15 News List

Physical retailers in trouble as online buys boom: UBS

By Ted Chen  /  Staff reporter

UBS Group AG on Friday said that Taiwan’s brick-and-mortar retailers are in clear and present danger, as more consumers are choosing to shop online.

Taiwan has a highly developed e-commerce infrastructure in which consumers have a high level of trust in online retailers and the products they offer, said Spencer Leung (梁裕昌), a Hong Kong-based analyst at UBS.

Helped by high smartphone penetration, most Taiwanese base their shopping decisions on online and offline research before making the purchase online, he said.

The landscape of physical retailers could change drastically in the near future, with department stores anticipated to experience the greatest blow, Leung added.

He said he expects department stores to see fewer repeat customers, who tend to visit only when there are steep discounts.

He suggested that retailers change their approach and become showrooms.

Demand for luxury brands in Taiwan is expected to fall about 30 percent in the next two to three years, he said, adding that they are no longer a major draw for consumers.

Instead, brand vendors should focus on improving the shopping experience and their product presentation, Leung said, adding that store clerks could adopt a more hands-off approach and let shoppers browse freely.

Department stores are also advised to stock a wider variety of brands in different price ranges and add other attractions, such as dining, Leung said.

Japanese physical retailers are a good example, as they have retained a loyal customer base, despite the nation’s large and rapidly growing e-commerce market, he said.

Brands could also work toward making their prices more consistent across different markets, Leung added.

Meanwhile, online shopping platforms should carry higher-priced items and raise the minimum order amount for free shipping eligibility to preserve their margins, he said.

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