According to the Cabinet-level Directorate-General of Budget, Accounting and Statistics, private consumption grew 2.27 percent in the first quarter of 2007, which was an improvement over 1.84 percent in the same quarter last year. Food consumption grew by 2.92 percent, while growth in transport and communication spending decreased 2.95 percent, Jao Chih-chien, a senior executive officer at DGBAS, said July 24. In contrast, products and services entered in the discount-luxury field enjoyed double-digit growth, the Chinese-language China Times reported July 16.
"The recent consumer trend is to spend less but still insist on quality," Mei Wu, research director of strategic planning and research at Ogilvy & Mather Advertising Taiwan, said July 20. "Look at some of the new car models, such as Ford's Fiesta, Suzuki's Swift and Nissan's Tiida. Although they are considered compact economy cars, their ads still emphasize the Yuppie lifestyle, which is slightly different from what was done in the past," Wu explained.
"The new shoppers want more than low prices; they also want a sense of beauty. That is the reason why Swedish furniture maker Ikea and Spanish fashion brand Zara emerged recently," Liou Wei-gong, associate professor of sociology at Soochow University in Taipei, was quoted as saying in the China Times report.
The same concept can be found in other lines of business. "Since our company was formed, we have set the goal of creating what customers want," Bonnie Lee, vice president of iROO International Co. Ltd. said July 22.
A garment and accessories company founded in 1999, iROO saves on marketing costs by not using advertisements to promote its products. Instead, the company invests the money in personnel training and purchasing new equipment, Claire Tseng, an iROO marketing manager, explained July 24. The company started with US$300,000 in capital and eight shops. Now it owned 50 stores and garnered revenues of US$18 million in 2006, she said.
To stay abreast of the latest fashion trends, iROO's policy was to launch new designs every week, Tseng said, in order to attract customers to its stores regularly. "Our designs were considered equal to those sold at department stores, but selling at half the price. We don't hold special sales, so customers would trust that our store offered the best prices from the start," she added. According to statistics from iROO, customers spent about US$200 per visit and bought three or four pieces of clothing.
Many restaurants emphasizing discount-luxury-status also flourished in Taiwan in recent years. "Consumers are sensitive to the quality of service in restaurants and they pinch pennies now. We should anticipate what our customers want, to make them feel that they are getting more than what they paid for," Olivia Chen, public-relations manager of Taipei's Gloria Prince Hotel, explained July 20.
The hotel opened a new restaurant, Hwa Young Gourmet & Banquet Zhong Lun, in October 2005 and spent a total of US$5 million on its renovation, Chen said. "However, the price of a banquet for 10 at Hwa Young is less than US$400, just a fraction of the price at five-star hotels in Taipei," she claimed. The hotel hired J.K. Yao, a professional lighting designer, to arrange the lighting set-up in the restaurant.
In addition, Gloria Prince also opened Hoja, another restaurant, at the Miramar Entertainment Park in Taipei, July 5. With a 165-square-meter space, it costed Gloria Prince US$300,000 to decorate Hoja, which was double the average expense, Chen noted.
"Fried rice with diced octopus in abalone sauce, Hoja's specialty dish, costs less than US$6 per serving, while it is about US$9 at the Gloria Prince. The dish is prepared by the same chefs, however, and its ingredients are purchased by our company," Chen said.
Seafood was the mainstay of another discount eatery. Fu Jin-huang, a fish vendor at Yongchun Market in Taipei, noticed a trend: His customers were decreasing as more people opted to eat out rather than cook. He opened Yu Jhuan, a mid-priced Japanese restaurant specializing in seafood, in September 2006. Ten months after the opening, the restaurant's revenues increased threefold, claimed Fu Sih-huai, a Yu Jhuan manager.
Another example of discount luxury is located in Taichung City. Starting his business with a small stall in Fengchia Night Market, Chang Shih-jen opened the Red Devil Steak House in January 2007. Chang spent over US$600,000 to decorate his restaurant. His investment can be seen in the dining areas, where the open-air kitchen has gold-plated ventilation systems and sauce stands. Despite the lavish decorations, a serving of pork steak at the Red Devil costs less than US$4.
"We sell 1,300 servings on weekdays and 1,800 per day on weekends," Cindy Lin, Red Devil's manager claimed July 21, adding that the restaurant earned about US$150,000 in sales each month. The combination of an elegant atmosphere and competitive prices made the restaurant popular, she said.
"Bargain dining has a limited profit margin, so we have to sell as many steaks as possible," Lin pointed out. "Before the opening day, Chang calculated that our restaurant must sell over 800 servings to make a profit."
"We predicted that the potential number of people eating out would increase," Lin said. In anticipation of this growth, Red Devil planned to build on its earlier efforts by expanding to other locations. "After our central kitchen is set up next year, we will start franchising our restaurant throughout Taiwan," she said, explaining that the central kitchen would prepare the food and transport it to franchise operators.
Beyond places to eat, consumers can also find sumptuous places to stay without paying high prices. Chang Sheh-neng, a career architect and interior designer, said July 23 that he retired at the age of 42 and built a villa for himself in Sinshe Township, Taichung County. "The villa is my own creation. I will pass it on to my children and grandchildren," Chang, was quoted as saying by the China Times report.
Chang and his family then immigrated to Canada. After living in Canada for more than a decade, he decided to return alone to Taiwan.
Finding his villa in disrepair, Chang commenced renovations to restore the villa to its former condition. After living in the building for a short period, he decided to convert his home into a bed-and-breakfast, naming it Tenlai Garden. He spent about US$70,000 on buying furnishings, such as tables, chairs and air conditioners, in order to make the Tenlai Garden a "five-star B&B." The nine-room hotel was revamped to have the look of a European castle.
"To create a warm atmosphere for the guests, I used teak for interior decoration. For example, the Roman-style pillars are made of whole teak trees. I want my guests to feel like they're in Europe, but they will only spend about US$60 per night for a twin room," Chang said.
In spite of his ambitions, the hotel was not successful in its first year. The average occupancy rate of Tenlai Garden in 2001 was 10 percent and revenues were about US$30,000, he noted. "But in these last two years, the occupancy rate averaged above 70 percent and it is hard to book rooms during weekends and holidays. Our annual revenues also increased to around US$130,000 or US$170,000," Chang claimed.
"Thanks to the booming tourism industry in Taiwan and especially in Sinshe Township in recent years, Tenlai Garden became popular," he said. The trend of offering high quality at low prices was also important to the hotel's success, Chang stressed.
Write to Edwin Hsiao at edwinhsiao@mail.gio.gov.tw