POYA Started From the Bottom, Now It's Here
How did beauty and daily goods retailer POYA, which started as a Tainan jewelry merchant, manage to now occupy the country's top retail locations?
In 2020, beauty and daily goods retailer, POYA, opened a new multi-level giant store on the corner of Zhongxiao East Road and Fuxing South Road. This location has historically been one of the most coveted pieces of retail real estate in Taiwan, home to premium department stores such as SOGO.
But why is this remarkable?
Because a decade earlier, POYA was widely considered a lower-end provincial beauty products retailer, that was only found in the central and southern regions of Taiwan. It had minimal presence in the north and It would have been unthinkable at the time for this rube from the hinterlands to be standing toe-to-toe with Taipei’s elite.
The POYA story is compelling, it's a ‘Retail Rocky’ underdog tale. The company started in 1985 as a jewelry vendor in Tainan's traditional markets. Thirty years later, it competes with global chains like Watsons and also Cosmed, owned by local giant Uni-President.
The Zhongxiao Fuxing Store has monthly rents that are estimated to range from NT$ 1.8 million to 2.12 million and has a lease term of 10 years. This represents POYA's conviction for long-term competitiveness in this premium location.
POYA stores are eclectic treasure troves that mix beauty and cosmetic products with home items, electronics, and many other items, including an inordinate amount of socks and underwear. They carry almost anything you can think of. Think Walgreens meets Dollar Store Bed Bath and Beyond, and more.
In the first quarter of 2024, POYA became one of the growth leaders in Taiwan's competitive retail sector, with an 11% revenue increase compared to Q1 2023. It now has over 370 stores nationwide, up from 56 in 2010, and boasts over 6 million members (over one-quarter of the population). All signs indicate that nothing but growth is on the horizon
This article is the story of how a plucky Taiwanese local hero became the belle of the Taiwan retail ball.
POYA’s Grand Strategy
POYA, as a southern Taiwan company, took a very slow and strategic approach to conquering the capital Taipei and moreover the whole island.
They adopted a strategy of "encircling cities from the countryside" (鄉鎮包圍都市), which meant focusing on building a strong presence in second and third-tier cities in Central and Southern Taiwan before entering the northern cities, where most of the population lives.
This approach had clear advantages, which paid dividends for the firm. First, these stores have much lower rents and still generate high revenues, which equals high profit margins. For example, its store in Gangshan, Kaohsiung, about a 40-minute drive from the city center, was once the top POYA store, generating over NT$ 12 million in revenue per month.
The second advantage is that as POYA grew rapidly in the south and central regions, its purchasing power and bargaining rights with suppliers also increased. This allowed it to negotiate lower wholesale prices and other costs, enabling it to compete with bigger names when it entered the North
Within this strategy, they focused on creative merchandising, innovative shopping experiences, data-driven decision-making, and leading-edge digital experiences, which are explained in more detail below.
1. Fresh Shopping Experiences and Creative Merchandising
One of POYA’s trademarks is that it always tries to create fresh shopping experiences for shoppers when they come to the stores., and they are always looking to update the shopping experience with innovations and novel experiences.
For example in bigger stores they have started to add make-up testing stations, with professional lighting, so that shoppers can have the same kind of experience that is associated with beauty sections of high-end department stores, but in low to mid-tier retailers. It is a premium experience made accessible to all.
In terms of merchandising, emphasis is also placed on creating a unique assortment chockablock with products that can't be found elsewhere. POYA shoppers are never sure, what changes are going to be made or what new products they will find in the store. Even though POYA holds many low-price items, it is equally full of unique and fun products. Larger POYA stores stock over 45,000 products and the store's management boasts of having the widest range of socks of any retailer in Taiwan.
There was a recent discussion on the popular BBS Forum PTT regarding why netizens loved POYA so much. Female respondents mentioned creative merchandising and that no matter what, every time they go in there they always find themselves spending money and interesting things to buy. Respondents remarked that the company has a deep understanding of the female shopping psyche and how to make women spend. Another very popular response was that the POYA stores always have bathrooms, which you do not find in COSMED or Watsons, making them a welcome refuge from Taiwan’s oppressive summer heat and constant heavy rains.
2. Data and Technology-Driven Innovation
Despite its humble roots in traditional markets, POYA is very much a data-driven retailer and for Taiwan, an early adopter of new technologies.
POYA adopted data-driven decision-making in the early 2010s to ensure optimal product assortment and promotional strategies.
In 2020, it launched its first foray into online retail, with the launch of its experiential beauty e-commerce platform "POYA BUY".
Carrying on this momentum, in 2023, it launched its ambitious "POYA" Super App, combining "POYA Pay" and "POYA Buy" services.
Loyalty programs built around super apps, that cover myriad services, are common elsewhere in the world, such as the WeChat ecosystem in China or Gojek in Indonesia, but there have been very few examples in Taiwan to date.
The POYA super app brings together a membership card, payment system, and e-commerce shopping platform, allowing members to store and redeem points across various channels digitally. It also recognizes users across stores, websites, and the official LINE account. This allows for a seamless loyalty points accumulation experience and POYA can send personalized promotions to shoppers and other membership activities, such as birthday gifts.
What's the Future for POYA?
POYA's top management believes that there is room for expansion to 440 stores in Taiwan and is looking to expand rapidly.
They have had a lot of success with their POYA Beauty stores which are focused on cosmetic and beauty products and do not feature the whole range of electronics, home goods, and other categories that are found in larger stores. These stores have a more curated selection of beauty and skincare products for the target audience of each location.
They have had less success with the 36 "POHome" (home-focused concept stores) and have announced they will no longer open dedicated POHome stores. The existing POHome stores will be gradually transformed into POYA + POHome combo stores. They expect that these new 'dual concept' stores will drive a 10-15% increase in revenues for their home products this year.
POYA's biggest challenge, now that it has premium retail space in Taipei, is how to move up the value chain and become a higher-level, higher-margin retailer. It's tough for a company long seen as provincial and low-end to shake off this perception and attract moneyed shoppers willing to buy higher-priced items.
What we do know is that POYA has shown such dynamism in the last two decades that it would be foolish to write them off in anything they do.