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Hutchison Whampoa's retail subsidiary AS Watson launched a new upmarket food superstore in Hong Kong on November 26, the first of a new generation of food stores for the company. Called TASTE, the 3,400 square metre store is located on the site of a former PARKnSHOP superstore in Kowloon Tong's Festival Walk shopping centre.

Operating under the tagline 'TASTE... More Than Food', the store stocks more than 25,000 international grocery items (a third more than an average PARKnSHOP outlet) and is clearly positioned upmarket. As well as offering a comprehensive range of fresh (and live) food and cooked deli counters, there is also a gourmet food bar (freshly made sandwiches are available around the clock), an open bakery and a Watsons Wine cellar. The product mix is international with Asian and Japanese products, such as Chinese siu mei and lo mei through to freshly prepared Japanese sushi and sashimi, mixing with premium ranges from Europe and North America. Although food is clearly the focus, there is also a strong health & beauty offer, complete with cosmetics counters.

As well as fresh sandwiches available throughout the day, customers can select quality ready-made meals to take home from 3pm onwards.

The store also features one of Hong Kong's most extensive selections of organic products, with more than 500 lines sourced worldwide. The range encompasses frozen foods, dairy products, groceries and fresh fruit and vegetables. Among its featured brands are President's Choice (the brand name of Loblaw's of Canada), Waitrose (the UK's quality supermarket chain) and Organic Garden.

There is also a strong emphasis on customer service. Most of the staff are fluent English speakers and shoppers can even ask staff to source in anything they want but can't find in the store. If TASTE can source the product, it will present the customer with the first item free of charge. There are baby-care facilities, a carry-to-car service and a home delivery service (free to customers who spend more than HKD400 (USD51) in the store; HKD20 (USD3) for smaller purchases).

AS Watson describes the TASTE store at Festival Walk as the first of a new generation of food stores for the company, clearly implying further openings. In fact, the company has already revealed that if successful, there is the potential to launch between eight to 12 TASTE stores in Hong Kong in the future. The company believes TASTE will cater for the increasingly sophisticated needs of consumers in what is a highly competitive market. Indeed, there has been a general shift in emphasis among Hong Kong consumers towards more price-orientated outlets in recent years, thanks to weakening economic growth, high unemployment and fears over the future. Hefty price-cutting by the major supermarket chains has also led to the emergence of fixed-price stores, such as AEON's $10 Plaza stores and AS Watson's $8mart (at present only a department within PARKnSHOP stores).

In this climate, the launch of the upmarket TASTE looks out of sync with consumer trends. However, it must be remembered that Hong Kong consumers are still among the wealthiest in Asia and a significant segment of the market is still willing and able to pay a premium for high quality goods and strong customer service. In fact, in late 2000, AS Watson launched the Great upmarket food hall concept in Pacific Place, the success of which may have demonstrated that it was worth establishing a whole chain of upmarket food stores.

Interestingly, AS Watson has also revealed that it intends to export the TASTE concept to mainland China next year in the cities of Shanghai, Guangzhou and Beijing. Although China is still relatively poor compared to Hong Kong and Western markets, the major cities are home to a growing number of affluent consumers. TASTE will be out of reach to most Chinese consumers, but AS Watson is hoping to tap into an increasingly significant sector of the market. This is not to say that PARKnSHOP development in China is being slowed down. In fact, Iwan Evans, the chief executive of AS Watson food retail division, has also revealed that the operation is seeking to acquire a retailing chain in eastern China to accelerate its expansion in the market as well as adding between 12 to 15 PARKnSHOP superstores in each of the next five years. According to Mr. Evans, "PARKnSHOP is aggressively expanding. China is a fantastic market, a market which takes a long time to understand. We have the number one market share in southern China, where we came from nowhere. And our mainland business is profitable."
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