Uni-President’s buyout of Carrefour will benefit consumers: academics

Uni-President Group's acquisition of Carrefour Taiwan will not hurt consumers' interests, as some people fear, but rather will result in lower prices, driven by more intense competition among the major supermarket chains in the country, academics said Thursday.

The deal, which was agreed upon Wednesday, has sparked concern in some quarters that it would give Uni-President and its main competitor PX Mart greater leverage to hike the prices of daily necessities.

Under the agreement, two Uni-President companies -- President Chain Store Corp. and Uni-President Enterprises Corp. -- will take full ownership of Carrefour Taiwan, paying a total of NT$29 billion (US$968.09 million) to acquire the 60 percent share held by the hypermarket's French parent company, thus obtaining full ownership, as they already own a 40 percent stake.

Asked to comment on the issue, Wu Shih-hao (???), a professor at the Department of Marketing and Distribution at National Kaohsiung University of Science and Technology, said an increase in the prices of daily necessities is unlikely, as neither Uni-President nor PX Mart is a monopoly in Taiwan.

Consumers are very sensitive to price increases, so "if Uni-President wanted to hike prices, people would simply shop at PX Mart or Costco instead," Wu said.

In fact, Uni-President is likely to offer consumers more discounts amid foreseeable fiercer price competition, which may result, however, in smaller margins for Carrefour Taiwan's upstream suppliers, he said.

Customers who are loyal to Carrefour do not have to worry that the acquisition would radically change the brand's DNA, Wu said.

Citing American and Japanese studies, he said most shoppers tend to choose a supermarket chain over the product brands they carry. Uni-President, therefore, is unlikely to ditch the French brands commonly found at Carrefour, and it would probably stock more of its own daily essentials on a gradual basis, Wu said.

With the acquisition of Carrefour Taiwan, he said, Uni-President is expected to cement its lead in the country's retail industry, as its customer base will be expanded to include loyal Carrefour shoppers.

Li Shyh-jane (???), deputy director-general of the Commerce Development Research Institute's Business Model Innovation Research Division, expressed similar views, saying that with the new development in Taiwan's retail industry, all the companies concerned are likely to offer more discounts and deals to attract customers.

"A head-to-head competition between Uni-President and PX Mart is a good thing, from a consumer's point of view," he said.

Source: Focus Taiwan News Channel