Vietnam - Specialty retailers expected to replace general supermarkets

VietNamNet Bridge – Specialty retailing is believed to be the dominant tendency in the near future, because this is the only model to be able to exist in the cutthroat competition among retailers.

The impressive figures

Three years ago, Dao Xuan Khuong, President of KCP Company, a consultancy firm, said that the time of general supermarkets was nearly ending and that general supermarkets would be replaced with specialty supermarkets.

Khuong said the specialty supermarket model can bring benefits to all the three parties, customers, manufacturers and distributors.

As for customers, they have many more choices when going to specialty supermarkets, where there are the products with different features and different brands. Meanwhile, manufacturers can easily set up their distribution networks, because they can focus on some distributors instead of spending money everywhere. And retailers can build up their longer term strategies to develop their brands and heighten the quality of services.

Most of the Vietnamese retailers named in the top 500 retailers in Asia Pacific honored by Retail Asia journal and Euromonitor are specialty retailers.

One of them is the Saigon Jewelry Company SJC, which has been listed itself among the top 500 for the last four consecutive years. By the end of 2011, SJC had had 186 retail shops bringing the turnover of 20,579 billion dong, or 18.5 percent of SJC’s total turnover

Nguyen Kim has become well known as a home appliances and electronics retailer after it has been preserving in following the model of specialty retail.

The first home appliance center of Nguyen Kim was set up in 1990. Two more retail centers were opened in 2007, one more in 2010, five more in 2011, and six more have been established so far this year.

While a lot of home appliance centers have to shut down in the economic difficulties, Nguyen Kim still got the turnover of 350 million dollars in 2011, an increase of 35 percent over 2010. The owner of the retail chain has decided that Nguyen Kim needs to obtain the annual 50 percent growth rate in the next three years. Especially, Nguyen Kim is considering the plan to list its shares on the bourse.

Vien Thong A, a big telecommunication equipment chain, has also been present in the top 500 list for the last three consecutive years. It reportedly had the turnover increasing by 10 percent in 2011 in comparison with 2010, while it expects a 20 percent increase in 2012 and 30 percent in 2013, mostly from smart phone sales.

The mobile phone – laptop distribution chain of Vien Thong A now includes nine smart phone centers which specialize in providing smart phone products, domestically made or imports, cheap and expensive, popular and the latest models.

How should the “specialty” be?

Khuong has noted that there is a difference in the specialty retailing in Vietnam and other countries in the world. Though retailers’ business has been prosperous, Khuong said, they have not shown the nature of the specialty retailing model.

In general, the products available at distribution chains come from suppliers. Therefore, retailers do not have specific products or specific brands.

Khuong has also noted that retailers do not understand the demand of consumers; therefore, they cannot provide associated products to satisfy consumers.

When someone goes to a café, he would also need drinks, milk or sugar. Therefore, retailers could place the products together to be able to sell different products at the same time.

Hoang Ngoc Vy, General Director of Vien Thong A, has admitted that the distribution chain has been meeting big difficulties in developing the chain in accordance with the model, partially because of the habit of Vietnamese people of looking for things at general supermarkets.

DNSG

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