1H 2017
Savills World Research
Taiwan
Asian Cities Report
Taiwan Retail
1H 2017
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Asian Cities Report | Taiwan Retail
GRAPH 1
Department stores
Retail sales growth rate by sector, 2009–
2016
Taiwan’s GDP growth reached 1.5% in
2016, increasing from 0.72% last year
due to the improving figures in private
consumption, investment and exports.
The economic recovery has had a
positive effect on the retail sector.
Retail sales registered an historical high
of NT$4.1 trillion in 2016, increasing
by 1.9% year-on-year (YoY), with the
main contributors being supermarkets
(9.3% YoY), auto sales (5.4% YoY) and
convenience stores (4.7% YoY).
Department store sales
Supermarkets
Convenience stores
Hypermarkets
10%
8%
6%
4%
2%
0%
2009
2010
2011
2012
2013
2014
2015
2016
Source: Ministry of Economic Affairs
GRAPH 2
Annual sales of department stores, 2013–
2016
2013
2014
2015
2016
90
80
70
Total sales for department stores
increased by 4.5% YoY to NT$331.1
billion in 2016. However, the
annual sales growth for three major
department store groups, including
ShinKong Mitsukoshi, Pacific Sogo
and Far Eastern, was stagnant. Only
the Breeze Center group has seen
a 25% growth in sales as a result of
the launch of Breeze Song Gao at the
end of 2015, and the renovation of
its Nanjing Store. However, they did
not reach their sales target in 2016.
In order to overcome this obstacle,
operators are changing and improving
tenant mix more regularly, and
adopting new strategies, including:
NT$ bilion
60
50
40
30
20
10
0
ShinKong Mitsukoshi
Pacific Sogo
Far Eastern
Breeze Center
Source: Ministry of Economic Affairs, Savills Research & Consultancy
Allocating more space to food and
beverage (F&B). Retailers have broken
with past traditions to replace female
clothing and accessories with F&B on
lower floors. For example, ShinKong
Mitsukoshi Taichung Store, featuring
the highest annual sales revenue
among all stores, remodeled its second
floor into F&B space and thereby lifted
the F&B proportion of revenue to 12%.
A11 Store in Taipei City also followed
this strategy and its F&B sector now
accounts for 22% of total revenue.
GRAPH 3
New supply of department stores, retail malls
and outlets, 2000–2018F
Department stores
350,000
Retail malls
Outlets
Offering exclusive dining options can
significantly increase footfall, and
long waiting lines sometimes bring
additional marketing advantages for
operators.
brands, shoes and cosmetic products
as major tenants on the ground floor,
tenants with attractive window displays
are being welcomed. Followed by
Harley-Davidson, Tesla Motors made
its entrance into the Taiwan market by
opening its first store (approximately
200 sq m) on the ground floor of
ShinKong Mitsukoshi A11.
Operators are looking to target
young customers aged 20 to 35 by
using affordable luxury brands as
anchor tenants on the ground floor,
such as Michael Kors, Coach and
Longchamp. In addition, following
the emerging fitness trend in the past
few years, the retail space for sports
products has been enlarged. Jordan
launched its largest Asia flagship store
in Breeze Song Gao. Retailers have
also used sports equipment such as
running tracks in their renovations,
or set up indoor basketball courts
to enhance customers’ shopping
experience.
Supply
Four new projects entered the market
during 2H/2016 and 1H/2017, adding
a total of 215,000 sq m of retail GFA
to the market. Three projects were
located outside Taipei City. In order
to differentiate themselves from
existing competitors, operators have
been focusing on creating a thematic
experience for customers and
strengthening their entertainment and
leisure functions. Recent new supply
has included:
Gloria Outlets Phase II, launched
at the end of 2016, contributed
around 13,400 sq m of retail GFA to
the market, introducing 65 brands.
Different from Phase I, Phase II
decreased the percentage of luxury
brands and focuses more on offering
outdoor leisure goods and sports
products, with major tenants including
Adidas and The North Face.
300,000
250,000
sq m
200,000
150,000
100,000
50,000
Operators are competing to appeal to
famous restaurants or cafes to open
their first store in department stores,
such as Jamie’s Italian, Honolulu
Coffee Shop in ShinKong Mitsukoshi
A11, and Cafe Florian ShinKong
Mitsukoshi A9, which attract significant
media coverage.
0
Source: Savills Research & Consultancy
02
Retailers are now focusing on their
ability to attract footfall, rather than
solely revenue. In addition to luxury
Phase III, planned to complete in 2020,
is going to strengthen its entertainment
facilities by containing a movie
theatre and a 15,000-sq m aquarium,
working with Yokohama Hakkeijima, a
Japanese theme park operator.
Next to Lihpao Land Theme Park
and Fullon Hotel in the suburb area
of Taichung City, the main purpose
behind the Lihpao Outlet is to provide
customers with more comprehensive
1H 2017
Taroko Park, close to Caoya
Road Station of the Kaohsiung MRT,
is a joint venture project between
The Taroko Sport and MobilityLand,
a Japanese motorsport racing
facility operator. A third of the land
area in this 8.7-hectare project is
designed for Suzuka Circuit Park; the
remaining land will be a shopping
mall, providing a total retail space
of 115,500 sq m for 220 brands.
Concentrating on highlighting its
sport and entertainment elements
and child-friendly concept, its annual
sales revenue is projected to reach
NT$5 billion in 2016. Notable tenants
include H&M, Studio A and Wesport,
offering baseball batting cages,
indoor golf and a skating facility.
Demand
Due to the emergence of online sales,
expansion strategies for local retailers,
as well as international fast-fashion
brands, became conservative. Store
expansion rates for fast-fashion
brands such as Uniqlo, Zara, GU, Gap
and H&M in 2016 were much slower
compared with 2014 and 2015, with
only 17 new stores opened, mainly in
major cities in the middle or south of
Taiwan. H&M is the only fast-fashion
retailer to have launched a flagship
store in Taipei City in the past 12
months. They entered the Taiwan
market in 2015 and opened 11 stores
in two year. At the end of 2016, H&M
opened its largest Asian flagship
store in the Ximending shopping area,
one of the city’s most bustling retail
destinations, covering a total retail area
of approximately 5,000 sq m over five
floors.
Sport and fitness activities, such
as running and going to the gym,
have recently became more popular
among young adults (20-40 years),
seeing sustained growth in the sports
footwear and apparel market. In
addition to increasing the retail space
of sports brands in department stores,
retailers, including Adidas, New
Balance, Jordon and Momentum, a
local sport goods distributors, are
opening plenty of new street shops.
The Ximending and Zhongxiao E. Road
districts have seen the expansion of
their footprints.
Different from the difficulty that most
retailers are facing, the growth of
the F&B sector is stronger. Several
international restaurant brands entered
the Taiwan market, including ICHIRAN,
Isaac toast & Coffee, Jamie’s Italian
and Lady M. However, the gradually
increasing minimum wage and the
amended labour standard law made
labour costs for F&B, which usually
has longer opening hours and higher
cost from salaries, rise significantly.
As new restaurants join the market,
competition in the restaurant industry
is getting more intense.
Street shop
High rent levels (approximate
NT$5,000 to NT$7,500 per sq m) and
the rise of the Xinyi district brought
challenges to the Zhongxiao E. Road
shopping area, which was ranked
alongside Ximending as the most
popular shopping areas in Taipei
City. Miss Sofi, DHC, SO NICE, and
Nine West (mainly women’s retail
brands) closed their street shops in
the Zhongxiao E. Road shopping area
in the past two year. The vacancy
situation has been increasing gradually
since the second half of 2015, and
the vacancy rate remained at a high
level of over 10%. However, individual
landlords who have owned their
property for a long time can usually
tolerate the vacancy loss and only offer
a minor rent correction.
TABLE 1
Major future retail projects, 2018–2021
Operator
Zone
Retail
GFA
(sq m)
Completion
year
Breeze Center
Nanshan
Breeze Center
Xinyi district,
Taipei City
47,850
2018
Mitsui Outlet Park
Taichung
Mitsui Fudosan
Wuqi district,
Taichung City
65,000
2018
Far Eastern
Xinyi district,
Development Store Taipei City
46,200
2019
165,000
2021
Property
Far Eastern A13
Mitsui Shopping
Park LaLaport
Mitsui Fudosan
Nangang
district,
Taipei CIty
Source: Taiwan Tourism Bureau, Savills Research & Consultancy
GRAPH 4
Number of stores for selected international
fashion brands, 2010–2016
2010
2011
2012
2013
2014
2015
2016
70
60
50
No. of stores
services during their vacation. With
200 brands and 73,000 sq m of indoor
and outdoor retail space, Lihpao
Outlet is expected to reach an annual
revenue of NT$6 billion.
40
30
20
10
0
Uniqlo
While the Zhongxiao E. Road district
suffered from the high vacancy
rate, Ximending ranked as the No.1
shopping area, due to the growth of
independent travellers. Mainly relying
on local customers and international
independent travellers, Ximending
was not as affected by the decrease
of group tourists from China since Tsai
Ing Wen took office in 2016. Several
retail brands opened their flagship
stores in this shopping area, including
H&M, E-Land Group, New Balance
and Jordan. We expect the leading
position of Ximending to continue
due to the completion of the Taoyuan
International Airport MRT line, which
will make Ximending the first stop in
Taiwan for international independent
travellers. 
Zara
GU
Gap
H&M
Forever 21
Source: Savills Research & Consultancy
TABLE 2
Significant retail transactions, 2016–Q1/2017
Date
Amount Area Property
(NT$ mil) (sq m)
Type
Property
Location
Jul 2016
NET Minquan
W. Store
B1 & G/F, No. 7
Minquan W. Road,
Taipei City
521
944
High
street
Oct 2016
G/F & 2/F No. 101,
Zhongxiao 101 Sec. 5, Zhongxiao
Store
E. Road, Taipei
City
480
637
High
street
Jan 2017
Whole block
retail building in
Ximending
2,200
3,917
High
street
No. 62, Xining S.
Road, Taipei City
Source: Savills Research & Consultancy
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