Carrefour recently clinched approval from Taiwan to buy 224 convenience stores.
Taiwan’s convenience retail development is driven by a strong economy, large urban population and rising incomes, shown by French mass grocery retailer Carrefour that has been strengthening its presence in the country, according to a report from Fitch Solutions.
Carrefour received approval from Taiwan's Fair Trade Commission to proceed with the acquisition of 224 convenience stores under the Wellcome and Jasons banner from Hong Kong-based company Dairy Farm for a total of $114.1m (EUR97m).
The company plans to convert the Wellcome stores under the Carrefour Market Banners throughout 2021 and to convert the Jason stores to a more premium banner. The company competes with Family Mart, 7-Eleven, and domestic player RT-Mart.
Fitch commented that Taiwan remains an attractive market for the convenience retail trend having been relatively shielded from the COVID-19 pandemic. Further, the country is tipped to record a GDP growth of 3% for 2021.
A strong economy will also help strengthen the country's convenience trend, with the unemployment rate projected to stay low at an average rate of 3.8% from 2021 to 2025.
“This means that with more people participating in the workforce, we expect to see an increase in a more time-sensitive consumer base, which will support demand for food and drink items through the convenience retail channel,” the report stated.
Convenience retail development will be driven by the country's large urban population, which accounts for 79.3% of the total population in 2021. The share of urban consumers is projected to reach 82.4% by 2030, supporting the development of convenience retail.
A significant number of urban consumers concentrated in large and busy cities, such as Taipei, means that more consumers will seek grocery stores close to home.
Fitch also noted that rising incomes will bode well for the convenience trend as increasingly time-poor consumers will have a greater propensity to spend more over the medium term from 2021 to 2025.
Out of all income brackets, the households earning over $50,000 per annum are expected to record the steepest growth in population over the medium term, accounting for 21.8% of total households in 2025, up from 18.8% in 2021.
“An increase in the upper income bracket will allow more consumers to purchase food and drink items through convenience store chains, which are typically priced at a high price point,” the report added.
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