Although private consumption has not picked up significantly this year compared with the strong showing in exports, some developments in the local retail industry do confirm that a recovery is under way, boding well for the nation’s economy.
First, department stores reported being crowded during their anniversary sales, which began early last month. Local media reported that Far Eastern Sogo Department Store, the nation’s largest department store chain, reported a 4 percent increase in sales as of Monday last week, as the retailer used coupons, gift certificates and discounts to encourage consumer purchases during its annual sale.
Then there was Singles’ Day. Again, Taiwanese consumers spent millions of dollars shopping online on Nov. 11, a day also known as the “Double 11” shopping festival. Local e-commerce players including Momo.com and PChome Online reported brisk business during the Internet phenomenon that originated in China in the 1990s.
Costco Wholesale Corp on Friday for the first time held a “Black Friday” campaign in Taiwan, but shortened the three-day event to one day after crowds of shoppers swarmed the retailer’s 13 local outlets and many discounted items sold out.
And now the Christmas shopping season is coming and most retailers are doing their best to offer the best prices in their stores, physical or virtual.
As a result, consumer spending should strengthen this quarter amid economic recovery and low unemployment, but the big question is how the spending is distributed.
How big a bite are online retailers to take out of their brick-and-mortar competitors’ market share?
Brick-and-mortar stores and offline retail bring an indispensable shopping experience to consumers, and Taiwanese brands and retailers still focus very much on physical sales channels despite the hype that has surrounded online shopping.
However, a potential challenge looms on the horizon: As online and offline converge, e-commerce players are seeing opportunities to target and interact with consumers individually using the latest technologies.
In the US, e-commerce giant Amazon.com has stepped up efforts to gain ground in the fast-growing consumer market through tie-ups with brick-and-mortar store operators — ranging from supermarkets to electronics chains — in its home market and abroad, while China’s Alibaba is playing catch-up and seeking to secure a foothold in physical retail in the short term. Last week, Alibaba announced that it would acquire 36.16 percent of Sun Art Retail, which has 446 hypermarkets in China under the RT-Mart and Auchan brands.
Amazon’s announcement that it would purchase Whole Foods Market in June and Alibaba’s bid to acquire the largest hypermarket chain in China last week present just the latest examples of a major online-offline integration in a new era of retail business.
As most retailers aim to strengthen both their e-commerce and physical offerings, and seek new ways to attract shoppers, to consumers’ own benefit as well as that of the merchants and brands, major e-commerce players’ strength in “big data” analysis, convenient payment tools and better online experiences are proving successful in connecting with a new generation of consumers and could beat traditional retailers in customers as well as profit margins.
Taiwan has not yet experienced mega-mergers and online-offline consolidation in the retail world on the scale seen in other countries, but that does not mean it will not come — it is just a matter of time.
However, are local retailers ready for the new challenge?
After all, counting on special promotions and big discounts does not do wonders for profitability, or long-term growth.
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