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Cosmetics and Cappuccino

Taipei has joined the growing ranks of cities targetted for brand extension by international fashion companies. While an established practice in Europe and North America, opening fashion-linked cafes by retailers is a comparatively recent trend in Asia, with Tokyo, Shanghai and Taipei, serving as test grounds for the concept's special blend of caffeine, cosmetics and chit-chat.

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

Decreasing Footfall

Can the allure of fresh coffee stem the rise of e-commerce
Can the allure of fresh coffee stem the rise of e-commerce

The shift into catering and hospitality by brands responds to the growing incursion of e-commerce – particularly the B2C (business-to-consumer) model – into the cosmetics/fashion space. The growing consumer preference to order items online has had a strong 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, many boutiques, department stores, megastores and supermarkets have struggled in the digital age to subsist on the revenue generated solely from their core business. In a bid to win back those customers who previously enjoyed the experiential nature of in-store browsing and purchasing, many such outlets have embraced coffee culture, seeing this as a way to add the kind of value that e-commerce operators cannot match.

Percolating Business

Overall, coffee is one of the few commodities that have seen global demand continue 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 per cent over the period 2012-2016. For the financial year 2016-2017, total demand is expected to be about 9.2 million tonnes, 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 United States (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 island every year, representing a total market value of about NT$70 billion (US$2.3 billion).

Despite such impressive figures, Taipei was a relatively late addition to the list of international cities that include Tokyo, Shanghai, Hong Kong and Singapore.

Relax and Recharge

Among the first to test the concept in the Taiwanese capital was agnès b, with the French fashion company opening a Cafe L.P.G., its boutique-meets-barista brand, in Taipei's Breeze Centre in September 2010. The group now operates five cafés in the city, all located in high-end 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 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 offers freshly brewed coffee, snacks and free reading material. Today, MUJI operates five coffee shops in Taiwan in three cities: Taipei, Taichung and Tainan.

Among the cosmetics brands to open self-branded coffee outlets in Taiwan are France's L'Occitane and 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 outlet arriving in the southern city of Tainan in March 2015. More recently, Kiehl's Coffee House opened its doors in Taipei's Xinyi district in June, 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.

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Content provided by Hong Kong Trade Development Council
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