Vietnamese retailers Growing at a Lightning Fast Pace
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Local retail firms are expanding quickly while foreign counterparts stagnate or quit due to fierce competition. The number of convenience stores in the country from April last year to April this year had risen by 72 percent year-on-year to over 3,100, according to Ho Chi Minh City market research firm Q&Me. That means 1,300 convenience stores came to the market in just one year.
Half of them, 660, came from Vinmart+, a convenience store chain of Vietnam’s largest conglomerate Vingroup. This is a growth of 82 percent. In the same period, supermarket chain Vinmart saw its number of store risen by 82 percent to 120 outlets.
Bach Hoa Xanh, a retail unit of the country’s major phone seller Mobile World (MWG), now has over 500 department stores after incorporated in 2015. It is seeing strong growth with VND4.3 trillion ($184 million) in revenue last year, three times that of 2017.
The market has recently seen strong merger and acquisition activities, with Vingroup’s retail arm VinCommerce buying out convenience store chain Shop&Go last month and supermarket chain Fivimart last October.
Vietnam’s retail market has become increasingly crowded with both local and international players over the last five years. Although experts have said that the market has a lot of growth potential, many foreign businesses have quit or scaling back expansion plans.
French supermarket group Auchan Retail might be the newest player to withdraw from the market.
“It is seeing strong growth with VND4.3 trillion ($184 million) in revenue last year, three times that of 2017.”
Auchan’s 15 out of 18 supermarkets will stop operating on June 3. Its CEO Edgar Bonte said that their business in Vietnam generated revenues of 45 million euros ($50.4 million) last year, but was making losses. He did not provide figures of the losses.
A source from the company, who wished not to be named, said the firm is negotiating with a few retailers to sell the outlets and the negotiations “are expected to end before Auchan withdraws from Vietnam early next month.”
Germany-headquartered Metro was sold to a Thai investor in 2014 and disappeared from the market ever since, while Malaysia’s Parkson has been closing down its malls since 2015.
Other convenience store chain has failed or will unlikely meet its initial expansion target. Japanese Ministop had only 115 stores as of April, even though it had planned to have 800 by last year.
Japanese convenience store chain FamilyMart saw its store number dropped by nine to 151 from last April to this April, while its initial plan was to have 1,000 stores by next year.
Vietnam’s revenue from selling goods last year rose by 11.7 percent from 2017 to $142 billion, up 12.4 percent from 2017.
Questions & Answers
Q.Which local firms are responsible for the significant growth in the number of convenience stores?
Which local firms are responsible for the significant growth in the number of convenience stores?
Vinmart+ accounted for 660 of the 1,300 new convenience stores, a growth of 82 percent. This expansion indicates Vinmart+'s strong market presence and rapid development in the sector.
Q.Why are foreign retailers struggling or withdrawing from the Vietnamese market?
Why are foreign retailers struggling or withdrawing from the Vietnamese market?
Foreign retailers are facing difficulties due to fierce competition from local firms. Many have quit or scaled back expansion plans, as seen with Auchan reporting losses despite significant revenue, and others like Metro and Parkson withdrawing.
Q.How much revenue did Auchan generate in Vietnam last year, and what was its financial outcome?
How much revenue did Auchan generate in Vietnam last year, and what was its financial outcome?
Auchan generated revenues of 45 million euros ($50.4 million) in Vietnam last year. However, despite this revenue, the business was making losses, leading to its decision to withdraw from the market.
Q.Which foreign convenience store chains have failed to meet their expansion targets in Vietnam?
Which foreign convenience store chains have failed to meet their expansion targets in Vietnam?
Japanese Ministop only had 115 stores by April, despite planning 800 by last year. FamilyMart also saw its store count drop to 151, failing its target of 1,000 stores by next year.
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