Following the rise of “smart consumption” strategies broadly adopted by local consumers, as well as the continuous slowing of global economic sentiment, department store operators have in recent years seen challenges in making significant growth in their anniversary sales.
That is why major department store operators have been launching their annual sales events for this year in succession, but all targeting only a single-digit percentage growth this year.
Their relatively conservative sales target indicated the headwinds facing the department store operators. However, they have sensed a potential new way to revitalize their business — a trend that people are willing to pay more for dining out at elegant and famous restaurants.
This is especially true for young people, who have increasingly supported the idea of enjoying “a little happiness in hand” by spending more on tasty food and good restaurants.
Far Eastern Department Stores Co (遠東百貨), which has 10 department stores and shopping malls in Taiwan, said consumer behavior has changed over the past few years, with more customers only making purchases during the annual sales events.
Under the circumstances, even when a department store sees significant growth in revenue during the annual sales, the momentum can be offset by decreasing buying sentiment at other times, Far Eastern sales assistant vice president Chuang Chien-hsiang (莊見祥) said.
In addition, the sales performance of clothing this year has lagged behind other sectors amid slowing global economic sentiment, which further brings down consumer confidence, Chuang added.
Other than launching more rounds of sales in a year, Far Eastern chief financial officer James Tang (湯治亞) said store expansion is an effective way to outperform the nation’s economy.
However, expanding the “right” store will be important, Tang said, adding that Far Eastern’s strategy to launch three shopping malls each in northern, central and southern Taiwan has helped raise the company’s overall sales.
These shopping malls, which have more restaurants, cinemas and other recreational facilities, offer customers a holistic entertainment experience, Tang said, adding that this business model has achieved better sales results compared with a general department store.
Pacific Sogo Department Stores Co (太平洋崇光百貨) vice president Cindy Wu (吳素吟) shared the thoughts, saying consumers increasingly now enter a department store for dining, instead of shopping, an indication that sales from restaurant and beverage sector has been more important to store owners.
Pacific Sogo — the nation’s second-largest department store chain also managed by Far Eastern Group (遠東集團) — has been launching a set of store adjustments for its restaurants in Zhongxiao branch (忠孝館), Wu said.
The move is expected to come to an end after Tien Hsiang Lo (天香樓), a Chinese cuisine restaurant run by Landis Group (亞都麗緻集團), is officially launched on Thursday next week, she said, adding that newly opened restaurants in the Zhongxiao branch all showed satisfactory sales results.
Far Eastern expects overall revenue of its 10 department stores generated during its annual sales event to reach the NT$10 billion (US$339.54 million) mark this year, showing an increase of 5 percent from a year earlier.
Pacific Sogo is targeting NT$8.9 billion during its annual sales event this year, after the total of NT$8.6 billion to NT$8.7 billion revenue it generated during the same event last year.
Shin Kong Mitsukoshi Department Store Co (新光三越百貨) said it hopes to generate a total of NT$200 billion revenue from sales this year, up about 1.5 percent from a year earlier.
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