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Broader distribution on the way. |
The Vietnam distribution market received three more big brand stores - Japan's Aeon, South Korea's E-Mart and Hong Kong Dairy Farm unit Giant - over the past few months, to add to a growing list of foreign players.
They join several international retailers entering the local market with ambitious plans to open hundreds of stores in the next few years, stiffening competition in the industry.
The Giant store opened in Ho Chi Minh City's District 7, where it has leased 3,500 sqm, and will sell Wellcome branded goods.
With its "one-stop-shop" merchandising concept and "low price, big variety and great value" marketing philosophy, Giant will offer a wide range of fresh food, grocery products and non-food items.
The country is not new to Dairy Farm which established a foothold several years ago, operating several Wellcome stores.
Vietnam now looks to the UK's Tesco and US Wal-Mart chains to provide a full range of large distributors. Both are conspicuous by their absence.
While classified as wholesale and retail, Vietnam's inventory of distributors is of varying sizes and scale, operating as hypermarkets, supermarkets, convenience stores and shopping malls.
Aeon Group recently decided to invest US$101 million in the Vietnam market. It's to build a shopping mall in Ho Chi Minh City and a supermarket chain which bears the Jusco brand.
The Japanese distributor began considering Vietnam a target market in Southeast Asia in 2009.
Unlike countries like India which have all the big name retailers, Vietnam apparently is more interesting for convenience store developers.
Japanese chains like Ministop and FamilyMart, are in the market, while the ubiquitous US chains 7-Eleven and Lawson are also believed to be readying to arrive in Vietnam in 2012.
FamilyMart now has 16 stores and reportedly plans to open 27 others in Vietnam in 2012.
Other big players have been increasing their presence. The Shop&Go chain now has 68 stores and plans to expand through franchising.
The Circle K Vietnam chain is to increase its stores to 40 by the end of 2012 and create a chain of 500 stores over the next five years.
The brand link
Many domestic businesses are meanwhile opening store chains to retain market position.
Saigon Co-op, one of the biggest retailers in Vietnam, still holds advantages in comparison with foreign retailers, with its deep knowledge of Vietnamese customers.
The chain now has a very large distribution network which should continue expanding. Co-op now has 57 supermarkets, and plans to open six more in 2012.
Nguyen Kim, a retailer of electronics and home appliances, opened five shopping centres in Ho Chi Minh City, Danang as well as in Vung Tau and Bien Hoa provinces in 2011. This year it plans to open 12 more centres, raising the total number to 30 by the end of 2012 and 50 by 2015.
The local chain is to spend at least US$28.8 million opening stores over the next four years.
Analysts predict that revenues from items such as mobile phones, television sets and laptops will increase sharply in the next five to seven years in Vietnam.
Last December, Vinatex Mart, a retail textile and garment department store operated by the Vietnam National Textile and Garment Group, opened five stores in Ho Chi Minh City and the provinces of Hoa Binh, An Giang, Tay Ninh and Gia Lai, with a total investment of more than US$4.8 million.
It plans to develop 200 such stores throughout the country by 2015.
International brands are becoming thick on the ground, including garment retailers The Gap and Warehouse in addition to general stores. Both local and foreign retailers are keen to develop a strategic advantage as the consumer market becomes more sophisticated.
from Nguyen Quoc Uy, Ho Chi Minh City Office
