"Unsalability" and big stocks have forced many home appliance retailers give up the business
which was once considered lucrative. Analysts believe that the market would
witness the leave of many more brands in the time to come.
WonderBuy is considered the first home
appliance retailer who gave up the games when it filed for bankruptcy on June
13, 2011. Hop Nhat Company, the owner of WonderBuy brand, said it had incurred
the loss of 52 billion dong just after one year of operation.
Prior to that, some home appliance supermarkets including Loc Le, Vietnamshop.com also quietly shut the doors because the supermarkets were poorly patronized.
Just several days after WonderBuy shut down business, Hoang Linh Company also closed the shop at No 190 Quang Trung Street in Go Vap district of HCM City. No information about the shop has been released and no successful contact with the retailer has been reported. People believe that Hoang Linh has followed WonderBuy and left the market.
Other supermarkets including Home One and Ideas have also been reportedly facing big difficulties with very few buyers, while analysts have predicted that they would follow the steps of WonderBuy soon.
In Hanoi, many shops on Hai Ba Trung Street, called the “home appliance street” have quietly disappeared. About 20 percent of the shops have shut down the doors or have transferred the retail premises since the beginning of 2011.
Even big supermarkets such as Media Mart, Pico and Tran Anh are also facing big difficulties because of the low purchasing power. A supermarket which previously had the monthly sales of 80 billion dong, now has the big stocks worth 270 billion dong.
Ngo Thanh Dat, Business Director of Tran Anh Company, said that there are two biggest problems for home appliance retailers: the overly high retail premises rentals and the big stocks due to the sharp fall of the demand.
According to Dat, retail premises rentals account for 50 percent of the total expenses. In order to make profits, a retailer needs to obtain the sales of 100 million dong a month per square meters of premises. However, the figure proves to be unreachable now, when the demand is too low. Some retailers have reported that they can earn 50 million dong, or 30 million dong per square metre only.
Analysts have pointed out that the bad forecasting capability is the main reason behind the high inventory volume. Most retailers placed big orders with suppliers earlier this year, believing that the home appliance market would see the high growth rate of 40 percent this year. However, in fact, the growth rate is just at 10 percent.
“The sales have been going very slowly since May 2011 with the revenue dropping by 30-40 percent. It is now a very difficult period for us,” Dat said.
Other retailers have also admitted the sharp sales falls. The newly opened branch of Pico at No 324 Son Tay in Hanoi gets the modest revenue of one billion dong a day, relatively lower than the expected level.
A lot of retailers have to bargain away to clear the big stocks, accepting losses. At Tran Anh, Pico and Media Mart, air-conditioners and power generators are being sold with big discounts. The 12000 BTU LG air-conditioner for example, is now selling at 4,990,000 dong instead of 6,490,000 dong.
Meanwhile, power generators have seen the prices dropped by 30 percent, which are believed to be lower by 25 percent than the cost prices.
The problem is that this summer is not as hot as predicted; while the electricity shortage is not as serious as thought, therefore, the two kinds of products remain unsalable.
The home appliance market is believed to continue facing difficulties until the end of 2012. Analysts believe that the “4-2-1” model would take shape on the market, which means that three biggest retailers would hold 70 percent of the market share (the biggest 40 percent, the second biggest 20 percent and the third 10 percent), while the remaining 30 percent would be held by other enterprises and small shops.
Prior to that, some home appliance supermarkets including Loc Le, Vietnamshop.com also quietly shut the doors because the supermarkets were poorly patronized.
Just several days after WonderBuy shut down business, Hoang Linh Company also closed the shop at No 190 Quang Trung Street in Go Vap district of HCM City. No information about the shop has been released and no successful contact with the retailer has been reported. People believe that Hoang Linh has followed WonderBuy and left the market.
Other supermarkets including Home One and Ideas have also been reportedly facing big difficulties with very few buyers, while analysts have predicted that they would follow the steps of WonderBuy soon.
In Hanoi, many shops on Hai Ba Trung Street, called the “home appliance street” have quietly disappeared. About 20 percent of the shops have shut down the doors or have transferred the retail premises since the beginning of 2011.
Even big supermarkets such as Media Mart, Pico and Tran Anh are also facing big difficulties because of the low purchasing power. A supermarket which previously had the monthly sales of 80 billion dong, now has the big stocks worth 270 billion dong.
Ngo Thanh Dat, Business Director of Tran Anh Company, said that there are two biggest problems for home appliance retailers: the overly high retail premises rentals and the big stocks due to the sharp fall of the demand.
According to Dat, retail premises rentals account for 50 percent of the total expenses. In order to make profits, a retailer needs to obtain the sales of 100 million dong a month per square meters of premises. However, the figure proves to be unreachable now, when the demand is too low. Some retailers have reported that they can earn 50 million dong, or 30 million dong per square metre only.
Analysts have pointed out that the bad forecasting capability is the main reason behind the high inventory volume. Most retailers placed big orders with suppliers earlier this year, believing that the home appliance market would see the high growth rate of 40 percent this year. However, in fact, the growth rate is just at 10 percent.
“The sales have been going very slowly since May 2011 with the revenue dropping by 30-40 percent. It is now a very difficult period for us,” Dat said.
Other retailers have also admitted the sharp sales falls. The newly opened branch of Pico at No 324 Son Tay in Hanoi gets the modest revenue of one billion dong a day, relatively lower than the expected level.
A lot of retailers have to bargain away to clear the big stocks, accepting losses. At Tran Anh, Pico and Media Mart, air-conditioners and power generators are being sold with big discounts. The 12000 BTU LG air-conditioner for example, is now selling at 4,990,000 dong instead of 6,490,000 dong.
Meanwhile, power generators have seen the prices dropped by 30 percent, which are believed to be lower by 25 percent than the cost prices.
The problem is that this summer is not as hot as predicted; while the electricity shortage is not as serious as thought, therefore, the two kinds of products remain unsalable.
The home appliance market is believed to continue facing difficulties until the end of 2012. Analysts believe that the “4-2-1” model would take shape on the market, which means that three biggest retailers would hold 70 percent of the market share (the biggest 40 percent, the second biggest 20 percent and the third 10 percent), while the remaining 30 percent would be held by other enterprises and small shops.
Source: VNN
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 Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.
No comments:
Post a Comment