Fast-growing Hong Kong chain 759 Store is challenging the dominance of major supermarket groups Wellcome and ParknShop in Thai rice which accounts for nearly half of Hong Kong’s rice market.
Prices of imported Thai rice fell to HK$8.58 (US$1.11) per kilo in the first quarter from HK$9.28 the second quarter last year, Trade and Industry Department data shows.
Meanwhile, retail prices in major Hong Kong supermarkets climbed to a 13-year-high of HK$12.44 per kilo in the first quarter from HK$12.27 in the third quarter last year.
Wellcome and ParknShop sell eight-kilogram bags of Golden Elephant Thai rice at about HK$80 while 759 Store offers an alternative brand at just HK$66.90 for an eight-kilogram-bag, Hong Kong Economic Times reported Tuesday.
When 759 Store gave an extra 10 percent discount on Mother’s Day last week, the inventory quickly sold out. Sales of Thai rice surged three times those on a normal day.
Coils Lam, chairman of CEC International Holdings Ltd (00759.HK) who founded 759 Store in 2010, said the Thai rice it sells is medium quality but even at such low prices, the gross profit margin is about 15 percent.
Wellcome and ParknShop have been criticized by legislator Ronny Tong for their pricing practices on Thai rice.
He expects the oligopoly to fall when Hong Kong’s competition law comes into effect next year.
The Consumer Council said labor and rental costs, among other factors, affect the retail prices of Thai rice, so a fall in import prices does not benefit consumers.
A spokesperson from Wellcome was quoted as saying the retail prices of its products are based on purchase prices, market conditions and the specific business conditions in its stores.
ParknShop said it has been offering rice products at promotional prices.
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