City Life: Supermarket warrior deploys ultimate detergent

Hong Kong

WAR CLOUDS may well be gathering over the Taiwan Strait where the Chinese and Taiwanese armies are mobilising but the war everyone in Hong Kong is talking about is the supermarket war.

Combat in the grocery zone may be commonplace elsewhere but in Hong Kong there has been a long-standing cosy duopoly by two massive companies who had practically three-quarters of the market. One of these chains, Wellcome, is run by the British-controlled Jardine Matheson group, the other is ParknShop (which would be in deep trouble were there a trade descriptions act in Hong Kong, as it rarely offers parking), run by a company controlled by Li Ka-shing, Hong Kong's richest man.

Customers were trained in the gentle art of surrender to sullen service and minor price competition. The recession has caused the chains to make some effort and improve service but nothing prepared them for the blast of real competition from a new company called adM@art. In theory, adM@rt is an online discount store but in fact it is an old- fashioned pile-em-high-and-sell-'em-cheap operation by Jimmy Lai, the man who began a clothes-retailing revolution with Giordano stores. He started another revolution in Chinese language newspapers, transforming their appearance. Using his papers as an advertising base, he is taking on the duopoly and they are spitting, warning suppliers if they touch adM@art they can expect to be shunned.

Advertising has been withdrawn from Mr Lai's publications and they have started slashing prices as never before. "I don't believe it," said a customer in the Sai Kung branch of ParknShop last week as he balanced two 24-can packs of Coca-Cola on a supermarket trolley. "This is costing me almost half what I used to pay." An elderly woman struggling to pick up a massive watermelon being sold for next to nothing, was bewildered by the price. "I've never heard of this adM@art", she said, "but if that's why they're so cheap now, I like them very much."

Outside the store are massive banners proclaiming price cuts and a host of other special offers to lure in the punters and keep them out of Mr Lai's clutches. Equally frenetic promotions decorate the nearby Wellcome store. But it looks suspiciously as though both stores are offering more or less the same bargains, just as they used to, although at considerably lower prices.

adM@art was conceived as an online shopping service, with a fleet of trucks making door-to-door deliveries. Most orders are faxed or phoned and business is also conducted from its bright yellow and grey stores. The biggest problem for the new entrant is that its switchboards are perpetually jammed and it keeps running out of stock. The company took full-page advertisements apologising and hopes the ardour of potential customers will not cool. Jimmy Lai does not do things by halves, so he seems reconciled to losing millions to get the new business going and he's forcing the competition to spend a great deal to do battle. Hong Kong finally has competition in its supermarkets and if adM@art can stay in the race it will encourage others to join.

This will mean the Hong Kong Tourist Authority's old claim about the former colony being a "shopper's paradise" will finally come true. The extraordinary thing is that this supposedly free market heaven has managed for so long to preserve such a tiny degree of competition in the most basic of retail markets.

Mr Lai is a folk hero to many Hong Kong people. He has a marketing genius that is the envy of his rivals. Their intense dislike for Jimmy Lai almost matches the support of his customers who turned to him for low- price, high-quality casual clothing, then for more lively Chinese newspapers, and now for cheaper everyday items from toilet rolls to laptop computers.

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