Costco does well while UK retailers tend not to: Retailing in Taiwan.

By | March 20, 2010

Costco is a generally wonderful place to shop, but I never seem to leave there without spending more than a NT$1000 as a minimum. Let’s face it: if you stock up on a bag of coffee beans $500, a carton of diet pills for sale $350, plus some socks or detergent or cereal or whatever. You’ve already topped out at more than $1000! And that’s without buying any hot dogs or cheese or veggies.

And it seems Costco likes Taiwan. Recent reports have claimed that Costco is preparing to open 20 more stores islandwide in addition to the six stores they currently have. Competitors like Carrefour really have nothing to fear from competition like this, since Costco doesn’t sell everything or in small quantities, it will be interesting to see who else opens here.

Tesco of course, flubbed Taiwan hugely. M&S did, too. Both of these stores came here with their European plans, and completely missed the mark. Tesco tried to be Carrefour, and didn’t realize it was too late. They should have added value, not dropped their prices!

M&S overlooked what made them different: they were British. They could have opened a higher end store in Taiwan, but chose to sell unflattering clothes at high prices to women who didn’t want them. The one thing they could have done well: food retailing. Well, cans, packets and dried goods don’t make a food retailer.

Both of them left the market in Taiwan. And the list of UK retailers who quit the local market includes some others very notable names: MotherCare, Boots, … and I predict there will be others. Why? Because when retailers come to Taiwan, you can’t just do cookie cutter Central England stores.

It is a pity that UK retailers tend not to understand the local market or how sophisticated Taiwanese shoppers can be. They are at the same time tight-fisted and carefree in their spending; they like US products but are heavily influenced by Japanese fashions; will travel across the city to shop or stay in their neighborhood; like new stores/products and yet will patronize stores that are considered traditional as well.

To be successful long term, the value proposition must be clear to the customers as well as what makes the store unique. It’s not enough to rent a large store, put up your store markings, and hope that the registers will start ringing. Many a Taiwanese business owner has learned that to their cost.