VietNamNet Bridge – Wellcome has officially left Vietnam after
paying back the retail premises to Dong Hung Company, the owner of Citimart
chain. However, Vietnam remains a very attractive market to foreign retailers.
Three Wellcome supermarkets were
developed over the last five years in Vietnam, a very modest figure if compared
with the hundreds Wellcome marts located in Hong Kong and Asian countries.
The withdrawal of the retailer,
in the eyes of analysts, showed that it cannot overcome the 5-year threshold to
reach to the even breaking moment. The analysts have pointed out some problems
of the retailer’s chain.
The Wellcome supermarket covers
an area of 300 square meters in district 1, HCM City. Meanwhile, Co-op Mart,
which is now considered the biggest retailer I the south, covering an area of
over 600 square meters, is located near. This means that Wellcome has to
compete with the Vietnamese giant.
The products available at
Wellcome do not have outstanding characteristics to make it more attractive
than Co-op Mart. Meanwhile, Co-op Mart has been following its strategy to
develop its private brands.
Over the last five years,
Wellcome has developed three supermarkets in Vietnam, while Co-op Mart opened
10 supermarkets a year.
With Wellcome giving up, Dairy
Farm does not intend to leave Vietnam. In September 2011, Asian Trade and
Investment Company, the trade representative of Dairy Farm in Vietnam, put the
first Guardian shop in its chain, specializing in retailing healthcare and
beauty care products in HCM City.
The shop has the initial
investment capital of 2 billion dong, while the minimum area of Guardian shop
is 80 square meters.
To date, 10 Guardian shops have
been developed in HCM City, while two more are expected to open in the last
months of the year to implement the development strategy on opening one more
shop a month.
With the sale prices fitting a
wide range of customers, the Guardian chain developer hopes that it would be
able to break even after two years of operations, like in Singapore, Malaysia
and Indonesia, according to Micheal Lim, a Singaporean investor in HCM City.
Following the strategy on
diversifying business, in late 2011, Dairy Farm decided to contribute capital
into a joint venture to open the first Giant hypermarket-- covering an area of
3500 square meters on the ground floor of Crescent Mall in district 7, HCM
City.
Dairy Farm’s Managing Director
Mecheal Kok said that the Giant chain would be expanded in Vietnam at a scale
like in Malaysia, where 77 supermarkets have been developed, including the 13
ones opened in 2011 and 2012.
A report by AT Kearney released
in June 2012 showed that Vietnam has fallen into the 32nd position in the
global retail development index from the first position in 2008. However,
Nguyen Thanh Nhan, Deputy General Director of Co-op Mart said that the grade
fall has in no way made foreign retailers shrink back.
The retail market has been
witnessing the strong development of the three biggest retail brands in
Vietnam, namely Metro, Big C and Co-op Mart. Metro on October 17 opened the
19th wholesale center in Vietnam after one decade of joining the market.
Meanwhile, Big C has had 20 shops
in Vietnam, while the Vietnamese Co-op Mart strives to set up 10 supermarkets a
year to obtain 100 supermarkets by 2015.
The biggest obstacle to retailers
in Vietnam is the high retail premises rents. In order to make profit after
five years of operation, a retailer needs to obtain the turnover of 200 million
dong per day at least for a 1000 square meter supermarket, if the premises rent
is not higher than 20 dollars per square meter a month in the central area, and
no more than 10 dollars in other areas.
NCDT
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, you may contact us at: sbc.pte@gmail.com, provisionally. Many thanks.
No comments:
Post a Comment