The intensification of economic changes presents a new opportunity for retail to break through

        Taiwan is facing uncertainty in negotiating equivalent tariffs with the United States externally, and there is a sharp freeze in the housing market due to credit controls internally. There are also many overall economic changes, which are unfavorable for private consumption. According to data from the Taiwan Economic Development Research Center at National Central University, the consumer confidence index continued to decline in April and May, hitting a new low in a year; In fact, since the second quarter, department store revenue has also declined compared to last year. This article will analyze the impact of the overall economy on consumer behavior and the retail department store industry, and further propose corresponding strategies for the retail industry.

        1、 Tariff Changes and Supply Chain Risks

                The United States is expanding tariffs and technology controls, forcing a reconfiguration of global supply chains. As an important link in the Asian manufacturing chain, Taiwan's exports to the United States will account for 23% in 2024, and most of its retail channel goods rely on imports from Chinese Mainland and Southeast Asia. The uncertainty of tariffs not only increases cost expectations, but also leads to conservative procurement and inventory strategies of enterprises.

        For consumers, they may consume earlier or later due to expected future price increases, leading to a chaotic consumption rhythm, or even reducing non essential expenses due to the increase in imported goods prices, which undermines the stability of the retail market.

        2、 The Dual Effect of Taiwan Dollar Appreciation on Consumption

        The recent continuous appreciation of the Taiwanese dollar is a major benefit for imported goods, helping to reduce the cost of raw materials and overseas branded products. Some high-end imported goods such as cosmetics, boutique products, and 3C products may stimulate consumers' willingness to purchase in the short term due to their relatively cheap prices.

        However, the appreciation of the Taiwan dollar also reflects the short-term effects of capital inflows and the influx of foreign hot money. If accompanied by a slowdown in export growth and pressure on corporate profits, it can easily lead to instability in the job market and a slowdown in wage growth. This contradictory situation may lead to a decline in consumer confidence in the medium to long term, with the public becoming more conservative about disposable income, thereby suppressing bulk consumption and luxury purchasing power.

        3、 Stock market turbulence, diminishing wealth effect

        At the beginning of 2025, the global stock market showed a clear rebound, and the Taiwan Weighted Index also fell by more than 10% in the short term. Under the tariff storm, it experienced a significant correction, and some stocks have not even bottomed out yet. The volatility of the stock market has a high impact on the consumption behavior of Taiwan's middle class, especially retired and investment oriented consumers.

        The 'wealth effect' is one of the key factors supporting the consumption of Taiwanese department stores and high priced retail items. When the stock market rises, consumers' perception of wealth increases, leading to unnecessary purchasing intentions. Once the market experiences a downturn, consumers tend to retain cash and reduce non essential expenses, which affects the effectiveness of promotional activities such as department store anniversaries and overall retail market buying.

        4、 Credit tightening in the housing market suppresses consumer momentum

        In order to curb the overheating of the housing market and the abuse of the New Qing'an loan program, Taiwan will implement the seventh wave of credit controls starting from September 2023. Stricter credit controls will be imposed on second home purchase loans, construction loans, and high priced products. In addition, the loan restriction order under Article 28 of the Banking Law has made it difficult for young people and self occupied buyers to apply for loans, increasing the pressure to purchase a house. With this year's tariff war and rising expectations of economic recession, the housing market has become increasingly pessimistic. Purchasing a house was originally the main wealth leverage tool for middle-class families, but now it is even more difficult to achieve due to credit tightening and high housing prices, and consumer confidence has been suppressed.

        In addition, high housing prices have led to an increase in the proportion of renters and have also changed the pattern of living expenses: the proportion of rent and daily expenses has increased, which has relatively suppressed the consumption of department stores and non essential goods.

        Faced with the challenges of the overall economic environment mentioned above, Taiwan's retail department store industry must quickly adjust its strategies to strengthen resilience and create a growth curve under the new normal. Here are three feasible countermeasures:

        1. Data empowerment, deepening member management

        By analyzing data and accurately grasping consumer behavior trends, combined with AI technology and predictive models, we promote smart marketing, personalized value-added services, and enhance member experience and stickiness. By integrating the membership system, point rewards, and OMO (online and offline integration) seamlessly through mobile apps, we aim to build a diverse and convenient consumer ecosystem, further enhancing customer lifetime value and making department store retail an indispensable trusted brand in daily life.

        2. Rooting in the community and creating a living environment

        In addition to a few stores in the core business district that focus on luxury boutique products and high priced images, retailers should also adapt to local conditions and transform into "one-stop" community shopping malls based on consumer needs. They should introduce popular restaurants, lifestyle experiences, parent-child spaces, supermarkets, and local brands with high cost-effectiveness to attract families and communities to consume regularly, in order to improve customer loyalty. Recently, several shopping malls that have opened or are about to open have transformed from shopping spaces to core social and lifestyle hubs, positioning themselves as regional shopping centers and successfully creating new topics for department store consumption.

        3. Local connectivity to enhance supply chain resilience

        To cope with global supply chain fluctuations, retailers should diversify supply risks and increase the proportion of Taiwanese manufacturers or Asian regional supply chains. At the same time, we will collaborate with local cultural and creative brands, as well as small and medium-sized enterprises, to establish differentiated product strategies that balance brand image, cost control, and market topicality, gradually building a more flexible and resilient retail supply system.

        Moving forward in turbulence, innovating in changing situations

        The overall economic instability has brought numerous challenges to the retail industry, but it has also injected transformational momentum. Faced with multiple pressures such as Trump's tariff policy, Taiwan dollar appreciation, stock market fluctuations and housing market contraction, the retail department store industry must face up to the structural change of consumer confidence, actively introduce data technology, respond to demand trends, flexibly adjust the commodity structure, redefine the role and value of the field, create a multi-level resilience system from the consumer end, the field end to the supply end, and build a flexible and in-depth growth engine.

        This is not only a response to current economic risks, but also a strategic deployment for the next wave of consumption. Only by adjusting thinking and layout, establishing a new order in the changing situation, and accumulating core competitiveness in transformation, can retail department stores successfully break through, welcome a new round of growth flywheel, and create a brand new future of their own.

        *Image source: freepik

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