VietNamNet Bridge – Some years ago, economists predicted the
strong development of convenience stores and mini supermarkets which fit the
current development conditions in Vietnam and the living standards of
Vietnamese people. However, this has not come true yet.
Convenience stores and mini
supermarkets have been struggling to survive over the last 10 years. Contrary
to all predictions, they could not grow up because traditional markets remained
the preferable choice by consumers. Meanwhile, the market conditions are not
good enough for convenience stores to develop: the retail premises have become
too expensive, while the logistics service fees have been increasing rapidly.
1000 fight against 300,000
There are some 1000 convenience
stores and mini supermarkets nationwide, a modest amount if noting that there
are 300,000 groceries and 2000 traditional markets.
There are some 30 retail chains,
including the well-known brands like Circle K, Shop&Go, Ministop,
FamilyMart, B&B, Day&Night, Co.opfood, Satrafoods, New Chợ, CExpress,
Hapromart.
Over the last many years, many
retailers still have been looking for their ways in the market, some others
failed to implement their plans, and others keep cautious in their plans to
expand their business scale.
Convenience stores can be
classified into some groups. These include food chains like Vissan with 100
sales points, Foocomart 44, Co-op Food 45, Hapro 130. Satrafoods plans to open
20 shops this year.
The number of 24/7 convenience
stores has also increased rapidly. Shop&Go with 83 shops is now considering
marching towards the north.
FamilyMart has had 27 shops out
of the 300 shops it plans to have by 2015 and 1000 by 2020. Ministor has opened
the first 12 shops in HCM City, fulfilling a part of the plan to open 500 shops
in the next five years, Circle K 33 out of 550 shops by 2018.
According to Nguyen Anh Hoa, the
owner of B&B chain, the most outstanding feature of the convenience stores
in Vietnam is the high availability of essential goods for family daily use. Of
this, food products account for 60-70 percent.
Meanwhile, according to Nguyen
Thi Tuyet Hoa, Director of Co-op Food chain fried food products make up 70-90
percent of total revenue of the chain. Small shops have the daily sales of 30
million dong, while bigger 50-70 million dong.
Paying money for… convenience
While big retailers now focus on
developing hypermarkets, smaller investors think of opening convenience stores.
The existence of convenience stores has helped bring goods closer to consumers,
because small stores can be opened everywhere, including the corners of
apartment blocks.
A report showed that the network
of 300,000 groceries now handle the distribution of 90 percent of the volume of
goods in the market. However, experts say the business model applied by the
chain has become out of date.
But they said everything can be
improved only when business households which run the convenience stores feel
the pressure to renovate from the market. When modern consumption channels
develop, they would have to change themselves and utilize the advantages of the
modern distribution channel.
Investors say one would incur
losses for the first five years of operation. However, a convenience store on
advantageous position would allow taking back the investment capital within two
or three years.
SGTT
Business & Investment Opportunities
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