Taiwan’s retail sector is in tough times, but there’s one type of retail that’s thriving. The market for mass-produced “promotional goods” is as strong as ever. Walk in any shopping district, and you see racks of clothing on sale for very low prices, sometimes less than half of the retail price. How can any business make a profit on such sales? We took a tour of the industry, all the way from the manufacturers, who produce special goods destined for the promotional rails, to the retailers whose business model is geared to make a tight profit from the items.
A dress is ironed.
It’s scanned and registered, then packed up.
At this discount clothing producer, staff check the promotion period of the sales. There’s a mountain of stock for each promotional season. This clothes manufacturer is 46 years old. They produce more than 10,000 items of sleepwear every year just for promotional retail.
Tang Shih-ching
FTV reporter
Right now I’m standing inside one of Taiwan’s largest wholesale sleepwear stores. You can see lots of employees at work packing up goods for shipping. These rails will be hung full of sleepwear to pack off to discount retailers in one go.
An amazing 70% of all the sleepwear in Taiwan is made here. The first floor is just the tip of the iceberg. Endless racks of clothes fill many more floors above. On average, when all the stock of one promotion is sold, the company earns NT$400,000 to NT$500,000, which translates into NT$10-20 million a year.
Chang Chuan-hsing
Sleepwear manufacturer
Each line has six or seven hangers lined up. We are selling the items at many different stores during each promotion. Some lines sell 400,000 or 500,000 items. Promotional items account for about 30% of our profits.
Brand stores and department stores fill their racks with goods from clothes manufacturers. But they prefer to sell only the latest styles. It’s not good if a fashionable line stays on the rails too long – its value decreases. Then they may have to sell it off at a discount to maintain cash flow. By contrast, the discount retailers who work exclusively with these promotional goods just buy in the amount of stock they need to fill their retail space. One promotional season can be worth up to NT$40 million – and 10% of those profits go to discount retailers.
Huang Pai-tang
Discount retailer
The fact is, our running costs are out of proportion to the current market price of this place. If your profits could soar high, then the retail proportions would go down.
This flourishing market for out-of-season clothing brings benefits to manufacturers, retailers and consumers. Taiwan’s promotional retail sector is an economic winner in these post-pandemic times.
