Retail chains rush for expansion
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The race for domestic retail market share was heating up as local and foreign firms looked to expand their networks, experts said.
At a recent meeting in HCM City, Trương Công Thắng, general director of VinCommerce Company, told partners that the retailer wanted to open nearly 10,000 stores and more than 300 Vinmart supermarkets in the next five years.
In addition, the company also plans to attract 100 strategic partners with an ambition to lead the Vietnamese retail market. The company’s financial report showed that in the first nine months of the year, revenue reached VNĐ23.6 trillion, posting a 56.5 percent year-on-year increase.
Meanwhile, Saigon Co.op is looking at expanding its network to at least 2,000 stores and annual average revenue growth of 8-10 percent in the next five years.
It has already opened 849 stores in 43 provinces and cities that attract 350,000 customers a day, up 26 percent compared to five years ago.
Another leading retailer in HCM City, Satra, said that they targeted to have five Satramart supermarkets and four malls by 2025, and depending on the market situation, 150-250 Satra branded stores.
Local retail giants are looking to expand their market share in the face of fierce competition from big foreign investors such as Aeon, Lotte, Big C and Mega Market.
The latest example is in October 2020, Japan’s largest retailer cosmetics chain Matsumoto Kiyoshi opened its first store in HCM City.
In July 2020, leading Japanese retailer Muji also opened a store in HCM City. Japanese fashion retailer Uniqlo, launched its first store last year.
Japanese retailer Aeon is also surveying a third shopping mall in HCM City in 2021, and plans to have 25 shopping malls in Việt Nam by 2025 with a capital source of US$2 billion for the investment.
“In addition, the company also plans to attract 100 strategic partners with an ambition to lead the Vietnamese retail market.”
Hirai Shinji, chief representative of JETRO HCM City (Japan External Trade Organisation) was quoted as saying by Thời báo Kinh Doanh that after the COVID-19 pandemic and the market was gradually recovering, it was a favorable time for Japanese retail groups to open in Việt Nam.
This would lead to fiercer competition, the experts said.
It was also important to note the efforts of domestic retailers to expand their systems into neighboring areas of big cities, as urbanization and incomes in these areas had been increasing.
Experts said that although retail sales were concentrated in major cities and key economic regions, with the high speed of urbanization, these areas would become the driving force for growth instead of existing big cities.
As a result, many domestic retailers had been gradually expanding to areas surrounding the big cities. The evidence is quite clear from data showing that suburban stores brought in more revenue with higher growth than inner cities.
According to retail expert Nguyễn Văn Thịnh, the number of supermarkets in 2020 had been decreased by 20 percent compared to 2019 – from 336 to 330. This decrease mainly came from Vinmart.
Meanwhile, the number of convenience stores has marked a growth of 60 percent – from 2,495 in 2019 to 5,228 stores in 2020. This came from Vinmart+ and Bách Hoá Xanh.
Small stores recorded a slight increase in 2020, while shopping centers posted a growth rate of about 11 percent from 96 centers in 2019 to 107 in 2020.
Thịnh said that although there were many changes in 2020, Việt Nam was still one of the most attractive retail markets in the world, and competition in the market was becoming more and more intense.
For some brands, it was an increase in the number of stores, others had to face restructuring, he said.
Questions & Answers
Q.What is VinCommerce Company's target for store expansion and revenue growth over the next five years?
What is VinCommerce Company's target for store expansion and revenue growth over the next five years?
VinCommerce aims to open nearly 10,000 stores and over 300 Vinmart supermarkets. Their financial report showed revenue reached VNĐ23.6 trillion in the first nine months of the year, a 56.5 percent year-on-year increase.
Q.Which foreign retailers are actively expanding in the Vietnamese market, and what are their plans?
Which foreign retailers are actively expanding in the Vietnamese market, and what are their plans?
Japanese retailers like Aeon, Lotte, Big C, and Mega Market are expanding. Aeon plans 25 shopping malls in Việt Nam by 2025 with a US$2 billion investment, and is surveying a third HCM City mall in 2021.
Q.How have different store formats changed in Vietnam between 2019 and 2020, according to expert Nguyễn Văn Thịnh?
How have different store formats changed in Vietnam between 2019 and 2020, according to expert Nguyễn Văn Thịnh?
The number of supermarkets decreased by 20 percent, mainly from Vinmart. Convenience stores grew by 60 percent, while small stores saw a slight increase and shopping centers grew by about 11 percent.
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