Uni-President Group’s (統一集團) acquisition of Carrefour Taiwan (家樂福) is not likely to hurt consumers, but rather result in lower prices driven by more competition among major Taiwanese supermarket chains, marketing experts said yesterday.
Uni-President on Tuesday said it had reached an agreement to acquire 60 percent of Carrefour Taiwan for NT$29 billion (US$970.22 million).
Added to the 40 percent stake it already owned, the hypermarket chain now has complete ownership of Carrefour Taiwan.
Photo: CNA
The deal has sparked concern that it would give Uni-President and its main competitor, PX Mart Co (全聯實業), greater leverage to raise prices of daily necessities.
Such increases are unlikely, as neither Uni-President nor PX Mart monopolize the Taiwanese grocery market, said Wu Shih-hao (吳師豪), a professor in the Department of Marketing and Distribution at National Kaohsiung University of Science and Technology.
Consumers are sensitive to price increases, so “if Uni-President wanted to hike prices, people would simply shop at PX Mart or Costco instead,” Wu said.
Uni-President is likely to offer more discounts amid fiercer price competition, although that could result in smaller margins for Carrefour Taiwan’s upstream suppliers, he said.
Loyal Carrefour customers should not worry about any radical change in the Carrefour brand, Wu said.
Citing US and Japanese studies, Wu said that most shoppers tend to choose a supermarket chain for the product brands they carry.
Therefore, Uni-President is unlikely to stop supplying the French brands commonly found at Carrefour, Wu said.
With the acquisition of Carrefour Taiwan, Uni-President is expected to cement its lead in the country’s retail industry.
Li Shyh-jane (李世珍), deputy director-general of the Commerce Development Research Institute’s Business Model Innovation Research Division, expressed similar views, saying that with the acquisition, such companies are likely to offer more discounts and deals.
“A head-to-head competition between Uni-President and PX Mart is a good thing, from a consumer’s point of view,” he said.
Separately, Taiwan Ratings Corp (中華信評) on Wednesday said that Uni-President has strong cash flow and a high cash balance to fund the acquisition of Carrefour Taiwan.
“The increased retail network penetration and diversification achieved through the acquisition will shore up Uni-President Group’s profitability,” Taiwan Ratings said.
The transaction would not impair Uni-President’s financial strength, and the company is likely to maintain its operating performance over the next one to two years, judging by its business diversity and improved profitability from its operations in China, Taiwan Ratings said.
Additional reporting by Crystal Hsu
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