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Taipei's Fashion and Frappuccino Outlets Set to Woo Lost Shoppers

With the rise of e-commerce resulting in falling footfall in high-street cosmetics and fashion boutiques, the Taiwanese capital is the latest city to bet on a coffee-culture brand extension as a way of winning back absent consumers.

Photo: Downtown Taipei: Set to be the new battleground for for combined caffeine and cosmetics outlets. (Shutterstock.com/Wayne0216)
Downtown Taipei: Set to be the new battleground for combined caffeine and cosmetics outlets.
Photo: Downtown Taipei: Set to be the new battleground for combined caffeine and cosmetics outlets. (Shutterstock.com/Wayne0216)
Downtown Taipei: Set to be the new battleground for combined caffeine and cosmetics outlets.

Taipei has joined the growing number of cities targeted by one of the international fashion companies as ripe for a little brand extension in the form of a drop-in coffee shop. Such a trend has long been apparent in Europe and North America, but it was only comparatively recently that it arrived in Asia, with Tokyo, Shanghai and Taipei proving to be the testing ground for the concept's winning blend of caffeine, cosmetics and chit-chat.

In the case of the Taiwanese capital, several European, American and Japanese brands, including agnès b, Roots, L'Occitane, Kiehl's and MUJI, have already tested the water with a series of stand-alone or shop-in-shop coffee shops. The newest addition to this roster is Chanel, with the Paris-headquartered fashion house having successfully trialled a number of pop-up coffee outlets in June and July this year.

Many in the industry have seen this shift into catering and hospitality on the part of these brands as a response to the growing incursion of e-commerce – particularly the B2C (business-to-consumer) model – into the cosmetics/fashion space. The growing preference on the part of many consumers to order such items online from the comfort of their own homes has had a hugely negative impact on the footfall in many conventional high-street outlets, with high rental costs and rising salaries making it difficult for bricks-and-mortar retailers to compete on price terms alone.

As a consequence, it has become a struggle for many boutiques, department stores, megastores and supermarkets to survive in the digital age on the revenue generated solely from their core business. In a bid to win back those customers who once enjoyed the experiential nature of in-store browsing and purchasing, many such outlets have now embraced coffee culture, seeing this as a way to add the kind of value that could never be matched by an e-commerce operator.

Overall, the allure of coffee is seen as undeniable. It is, after all, one of the few commodities that sees global demand continuing to rise, regardless of the prevailing economic conditions. According to the US Department of Agriculture, the level of global coffee consumption enjoyed a compound annual growth rate of 2.27% over the period 2012-2016. For the financial year 2016-2017, total demand is expected to be about 9.2 million tons, a new all-time high.

According to figures for the 2015-2016 period, the world's four largest coffee consumers were the EU (29%), the US (17%), Brazil (13%) and Japan (5%). Taiwan ranks about number 70 in the world coffee-drinking league, with some 2.8 billion cups drunk in the territory every year, representing a total market value of about NT$70 billion (US$2.3 billion).

Despite such impressive figures, Taipei has been a relatively late addition to the list of international cities offering a blend of cappuccinos and cosmetics, as well as a little latte with the latest in lady's fashions. Indeed, such outlets were commonplace in Tokyo, Shanghai, Hong Kong and Singapore long before Taipei was targeted.

One of the first to trial the concept in Taiwanese capital was agnès b, with the French fashion company having actually opened a Cafe L.P.G., its boutique-meets-barista brand, in Taipei's Breeze Centre back in September 2010. The group now operates five cafés in the city, all located within up-market department stores.

The next entrant to the sector came courtesy of Roots, the Toronto-headquartered clothing and leather-goods company, which opened its first Roots Lodge Café in the Shin Kong Mitsukoshi Mall in Taipei's upmarket Xinyi district at the end of 2011. A second Lodge Café was then opened in 2012 on the same site as the company's newly launched flagship store in the city's Da'an District, another prime shopping location.

According to a spokesman for Branded Lifestyle, Roots' Taipei-based partner company, the Lodge Café concept grew out of a desire to provide a space where the retailer's VIP shoppers could relax and recharge. Now, however, it is seen as a key channel for building brand and product awareness.

A more recent arrival was MUJI, with the Tokyo-headquartered household retailer opening its first Café & Meal MUJI in Taiwan in 2014. This was followed in December 2016 by the launch of the world's first Café MUJI concept store and the opening of MUJI Books. Operating out of the Shin Kong Mitsukoshi Mall, the latter specialises in the provision of freshly brewed coffee, snacks and free reading material. Today, MUJI operates five coffee shops in Taiwan in three different cities – Taipei, Taichung and Tainan.

Photo: Can the allure of fresh coffee end the rise and rise of e-commerce? (Shutterstock.com)
Can the allure of fresh coffee end the rise and rise of e-commerce?
Photo: Can the allure of fresh coffee end the rise and rise of e-commerce? (Shutterstock.com)
Can the allure of fresh coffee end the rise and rise of e-commerce?

Among the cosmetics brands to have opened self-branded coffee outlets in Taiwan are France's L'Occitane and the Kiehl's, a US specialist in skin, hair and bodycare products. L'Occitane opened Taiwan's first L'Occitane Café in Taipei in December 2012, with a second such outlet arriving in the southern city of Tainan in March 2015. Most recently of all, Kiehl's Coffee House opened its doors in Taipei's Xinyi district in June this year, with the shop-in-shop's combination of coffee, typical New York cuisine and skincare services said to have proved to be an immediate hit.

Robert Kang, Special Correspondent, Taipei

Content provided by Picture: HKTDC Research
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