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Magazine digest -- Third-largest organic food chain plans expansion

2012/05/18 20:30:04

Competition among Taiwan's organic food stores is set to intensify, with the third-largest chain, Cotton Land, speeding up its expansion after two rounds of capital injection that brought in professional management that fits the chain's unique style.

In March, Ruentex Group Chairman Samuel Yin acquired a 25 percent stake in Cotton Land at a cost of nearly NT$200 million (US$6.76 million), boosting the chain's capital for its plan to open more new stores.

Before Yin's investment, the chain was fully owned by Microbio Co., which acquired it from its founder, Weng Hsiang-chun, in 2008 and helped establish its computer management system.

While the system allowed the chain to nearly double the number of its stores from 22 to 42 in the past year, its introduction was quite challenging for the staff, who were more used to Weng's style of focusing on service rather than sales figures.

According to Lo Tsai-wen, a manager who has worked for the chain for over 18 years, Weng, who remains the chain's chairwoman, did not do stock-taking, set sales targets or require sales reports from each store prior to Microbio's buyout.

After working with the chain's in-store staff for nine months, Microbio's management team established a system that allows store managers and workers to better serve customers by analyzing their past purchases but without having to worry about sales and performance.

Meanwhile, the headquarters handles issues related to figures, such as procurement, inventory and assessment of marketing campaigns.

Microbio CEO William Lu said the organic food business is about cultivating a lifestyle through service and sharing and that therefore, the chain does not set sales targets for store managers.

Reporting NT$600 million in revenue for 2011, with all its stores operating at a profit, the chain plans to expand outside northern Taiwan and have a total of 100 stores by the end of this year.

The chain's main rivals -- Santa Cruz Organic Foods of the Uni-President group and Leezen -- have 95 and 80 stores, respectively.

Winnie Hung, secretary-general of the Taiwan Chain Stores and Franchise Association, said Cotton Land has gained its footing in the market through its chain of fully owned stores but should prepare for the potential challenge of maintaining its service quality in its planned expansion through franchise stores. (Business Weekly 1270)(translated by Kay Liu)