Thomas Tseng reviews one of the latest trends in Taiwan’s fast-growing food and beverage retail sector.
The Taiwan millionaires club shot to the top of the Four Asian Tigers in 2017, with 58 new millionaires in 2017.
At 381 millionaires in total is now ranked 13th in the world according to the 2017 Global Wealth Report by Credit Suisse.
However, many critics have said that this growth comes at a cost and the gap between the ‘have’s’ and the ‘have not’s’ appears to be widening on Taiwan.
From a Food and Beverage (F&B) retail perspective this is felt in the erosion of middle income consumers and this, combined with changing consumer habits, has seen retailers in supermarkets, hypermarkets and convenient store chains take steps to reshape their business to meet the market.
One of the most noticeable changes in the retail sector is in the size of the stores. Conventional wisdom suggests that a convenience store would have a small storefront on a busy street corner with items crammed into a little space, whereas supermarkets or hypermarkets would have plenty of floor space and product selection but be relegated to distant commercial or industrial areas.
However, such distinction in store size and location is becoming less clear as retailers are modifying store size and format to attract more shoppers.
There are already more than 5,000 convenience stores located in prominent hotspots across Taiwan and many have expanded their store format to include low cost, convenience food, and sit down areas that cater to budget conscious people in a hurry.
As this format gains traction in the market major hypermarket chains RT Mart and Carrefour have developed their own 24-hour “midsized community stores” deep in residential neighborhoods that carry only the most popular items.
The competition in this new segment of stores is the latest evidence retailers are trying to “extend to the middle” to attract more customers.
Regardless of whether a business is upsizing or downsizing, one common trend amongst the retailers across all channels is the focus on the ready-to-eat food section.
With longer working hours and smaller family sizes, more Taiwanese consumers prefer to eat on the go rather than cook at home. As a result, demand for a quick and convenient meal, such as sandwiches, instant noodles or microwaveable pastas is on the rise.
Both supermarkets and convenience stores are addressing this demand with a noticeable increase in the size and variety available in these categories.
Many industry leaders contract third party factories to manufacture their own signature products.
Industry leaders Incite works with suggest that these changes will only grow more prominent as the island nation continues to become more polarized between high net wealth and budget conscious consumers.
Thomas Tseng is the Taiwan Country Manager for Incite. Visit www.exportincite.com