New Year Spending

Economic News

22 Jul 2010
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The week-long holiday celebrations that mark Chinese New Year are considered the most important time of the year for Taiwanese retailers. As people across the country bought lavish foods and gifts to celebrate the year of the pig, retailers are expected to have done well.



The New Year Shopping Carnival in Taipei, which ran for two weeks prior to Chinese Lunar New Year, is largest of its kind in Taiwan and is thought to have attracted 700,000 to 800,000 people according to the local press. The Datong administrative district office estimated that at least $30m would be spent during this period.



Promotional activities such as raffles and traditional lion dancing helped attract the crowds. There was also cooperation with the mail service, Taiwan Post, until very recently named Chunghwa Post, which provided shoppers with home delivery service with a free box for a flat fee of $2.40. This was designed to encourage shoppers to buy more to fill up their box and to send gifts to relatives across the island.



Retailers on Dihua Street, where the carnival originated, estimate that 15% to 20% of their annual revenues come from the two weeks preceding Chinese New Year.



Hypermarket operators like Carrefour and Tesco Stores (Taiwan) offered promotions to encourage customers to buy gift boxes. Many hypermarkets were open 24 hours a day to take advantage of the increased consumer demand Chinese New Year brought. According to a local media report, hypermarkets expected an average of a 20% to 30% increase in revenues compared to last year.



To attract customers, Taiwan's leading department stores offered "fu dai" (fortune bags) in the run up to the New Year. According to the local media, these bags are one of the most important promotional tools department stores use to lure in customers during this competitive period. Modelled on the tradition of giving cash payments in red envelopes for the New Year, the bags offer consumers items worth far more than what they paid for the bags.



Pacific Sogo offered fortune bags for around $60 with either handbags or wristwatches worth over $300 included. Many customers have been attracted to buy fortune bags as some of the department stores offer prizes and gift tokens to the lucky customers who choose the right bag. Due to the popularity of the bags in previous years, more department stores offered them this year and it seems their contents are becoming more valuable. They included a wide variety of merchandise, including cosmetics, electrical appliances and even vehicles. The stores only offered a limited number of these fortune bags, which further increased the queues of customers to the stores hoping to find a bargain.



Luxury goods have been an increasingly important sector within of the retail industry in the last few years. Dirk Sänger, director of Breitling China, Taiwan Branch, told OBG he is very positive about the luxury goods sector in Taiwan. "There are more and more people in Taiwan who can afford luxury items like our watches and many of our customers are first time buyers in this market." He said that Taiwanese buyers of luxury goods are very brand conscious and demand high specifications.



It is traditional for companies to give their employees New Year bonuses and a survey by an online employment agency last year suggested 84% of employees were expecting a bonus. Retailers have been competing to encourage consumers to spend their bonus in their shops.



Non-traditional retail businesses have also been affected by the Chinese New Year holiday. In a statement to OBG, Randy Lee, spokesman for Eastern Home Shopping and Leisure, which runs five TV home shopping channels, said that while many people typically travel during holidays, during the overly long holiday break "consumers chose to stay at home and relax, greatly boosting the opportunities to watch our channels".



Online businesses also seemed to benefit from the holiday spending. Lee explained that sales for his company's TV shopping channels did slightly better than the same period last year but that during the holiday period their website, ETmall.com, experienced explosive growth. During a period when daily sales figures usually exceed $302,000, the company continually came within striking distance of $605,000, setting new sales records and demonstrating the limitless attractiveness of virtual access channels.

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