Taiwan is a prime case study of how physical shopping cum socialisation can co-exist successfully with e-commerce.

The store and mall-based retail market in Taiwan is likely to post sluggish growth this year compared to the robust growth of e-commerce, according to EuroMonitor. A combination of factors are causing the decline in brick-and-mortar sales– notably stagnant salaries, economic uncertainty, declining Chinese arrivals and most tellingly, the rise of e-commerce.

2017’s retail sales figures may show a decline but it grew at a healthy pace in 2016 despite the weak purchasing power. According to reports, the key drivers for the growth have been increased activities by retailers and credit card issuers. At the same time, e-retailing posted strong gains with many large-scale retailers launching their own online stores.

In other words, Taiwan is a prime case study on the convergence of the online and offline platforms due primarily to the pragmatic nature of Taiwanese consumers who will use whatever channel that best suits their needs.

There is evidence that traditional retailers which can successfully ride on the e-commerce boom can still thrive. An example is Eslite Spectrum Corp., the bookstore, shopping mall, and restaurant operator, which has rebranded its stores as lifestyle destinations; while also having an online shopping channel. Its iconic 24-hour store on Taipei’s DunHua South Road attract both locals and tourists alike. There, they can eat, drink, socialize, attend film screenings, musical performances and lectures – and sometimes shop for books.

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Taiwan’s physical shopping landscape is very well-developed with a rapid expansion of outlets and large shopping malls amid the popularity of mall culture. Outlets however have performed better due to the bigger discounts offered. In particular, outlet malls in decentralised locations, away from city centres are expected to perform reasonably well since they cater to under-served locations. Japanese outlet mall developer, Mitsui Fudosan projects about 10 outlets in Taiwan within the next few years.

But e-commerce’s rising popularity may dent those optimistic projections. Pro-e-commerce analysts have predicted that e-commerce sales will climb to 40 – 50% of total retail sales in Taiwan within 2 decades. Currently, online sales comprise about 10% of total retail sales while they have averaged 10-15% annual growth over the past five years.

Buying online in Taiwan is a breeze due to its matured e-commerce platforms, comprehensive logistics infrastructure (overnight deliveries are common) and high penetration of high-speed Internet. In 2015, Taiwan ranked third in terms of e-commerce penetration rate (62%) after the United States (66%) and the U.K. (77%). This trend is projected to continue albeit at a pace that allows for physical shopping cum socialisation at lifestyle malls.[/ihc-hide-content]

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