SCMP Saturday, October 6, 2001


ParknShop signals new price war

CYNTHIA WAN and FLORENCE NG

A fresh round of supermarket price wars could be on the way after ParknShop announced yesterday it was slashing prices by up to 50 per cent on more than 3,000 items to boost flagging sales.
The chain will also open 11 new shops early next year, hiring more than 1,000 people, to try to win more customers.
Its rival, Wellcome, said last night it was unmoved by the initiatives and would stick to its lowest-price guarantee.
ParknShop marketing director David Durnford said: "The reason [for this sale] is obvious . . . Unfortunately, times are hard. We have talked to our customers and what they want most is more special offers.
"Our customers' worries about the economy have prompted us to significantly increase the number of bargains on offer at rock-bottom prices."
The chief executive officer of parent company A. S. Watson Group's retail food division, Logan Taylor, said the group did not want to trigger a price war.
"The consumers are the ones who will benefit." He said sales had fallen "a few per cent" after the US terrorist attacks.
"People are not buying fewer items these days. Actually, they tend to buy more basic food, such as oil, rice and noodles as they cook at home more. Sales of discretionary products like biscuits and candies have gone down," he said.
Customers were expected to save a total of $100 million from the price-cutting campaign, ParknShop said.
Mr Taylor said that, on average, a shopper spent $60 per visit.
More than $180 million will be spent to open 11 stores - six of them superstores - by January, taking the chain's total number of employees to 10,000.
The group has also invested $50 million in establishing a food distribution centre in Kwai Chung which is due to open on December 1.
A spokeswoman for Wellcome said: "We have always been the leader in low prices.
"Customers are guaranteed the lowest prices with the Double the Difference Refund Programme launched in April."
Dah Cheong Foodmart, which has 42 stores, said it had already cut prices by 10 to 15 per cent during the Mid-Autumn festival.
Its assistant general manager, Amy Chong, said: "After the terrorist attacks on the US, we've noticed that customers are spending less.
"Compared to last year's Mid-Autumn Festival, our profits dropped considerably this year. That's why we cut prices."
Family-run stores at public housing estates are expected to be hit hardest by the price campaign.
The chairman of the Public Housing Estate Shops Operators' Union, Lam Wai-yin, said: "The large-scale supermarkets are pushing us to extinction.
"Our customers are from the low-income group. Many of them are jobless or on the dole. But we can't offer them a lower price since we've our rent to cover."