No matter who owns ParknShop, consumers want fairer pricing
Updated: 2013-07-24 07:14
By Hong Liang(HK Edition)
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Few business stories have direct implications on the daily life of the people. The proposed sale of supermarket chain ParknShop by business conglomerate Hutchison Whampoa Ltd is one such example.
Hong Kong people are understandably concerned about the news. ParknShop is the larger of the supermarket duopoly that has a stranglehold on a more than 70 percent market share. The other chain is Wellcome, a member of Jardine Matheson Group, one of the oldest "hongs", or trading companies.
Despite occasional complaints about unfair pricing, the two supermarket chains have remained the top choice of local consumers who feel comfortable shopping in any one of the many outlets of both, which have become household names. Consumers know exactly what to expect every time they go.
Newcomers have managed to carve out a niche market for themselves. City'super, for instance, has opened several outlets in high-end shopping malls to cater to more up-market clientele. The Japanese-style supermarkets in Sogo and Justco are popular among the middle-class shoppers who want a change every now and then.
But none of these have either the desire or the resources to challenge the duo's dominance. Indeed, the market has become so mature and saturated that changing it requires investments too large to be worth considering.
Analysts in Hong Kong have speculated that limited growth in the sector prompted Hutchison Whampoa to sell ParknShop to raise funds for other more promising ventures, such as telecommunications in Europe. Whatever the motive, the plan is being closely watched not just by investors, but the public at large. This proposed transaction, when it goes through, could affect the lives of many who shop for daily necessities at one of the two supermarket chains.
The question foremost in the mind of consumers is this: who will be the new owner of ParknShop? Consumers are suspicious of change in a brand to which they have grown accustomed. To be sure, ParknShop, and Wellcome for that matter, aren't the last word in shopping experience. But the standard of service, cleanliness and food safety they follow is widely accepted by the public. Prices are seen to be fair and the choice they provide, adequate.
It is not known who will bid for ParknShop. But two names come immediately to mind to keen observers of the local corporate scene. One is China Resources, the State-owned conglomerate with a big interest in property development. The company also operates a chain of supermarkets in some mainland cities under various brand names as well as in Hong Kong. The other one is Citic Pacific, a unit of the mainland conglomerate, which owns Dah Chong Hong, a trading company with interests in processed food and frozen meats.
China Resources operates a number of supermarkets in Hong Kong but has failed to make much of an impact. Dah Chong has its own retail outlet under the name DHC Food Mart, selling nicely packaged meat at reasonable prices.
Either one of these two companies has the resources to bid for ParknShop allowing the successful bidder to gain immediate dominance in a market from which it is currently excluded. They may have a different assessment than Hutchison Whampoa's of the future of the supermarket business in Hong Kong considering the synergy ParknShop has with their other businesses.
Whatever the outcome, what Hong Kong people want most is that such synergy can be translated into fairer pricing and improved services.
The author is a veteran current affairs commentator.
(HK Edition 07/24/2013 page1)