Mobile World doubles down on groceries business

Retail giant Mobile World Investment Corporation has announced plans to invest VND1 trillion ($43.07 million) in Bach Hoa Xanh, its groceries business.

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Bach Hoa Xanh plans to have 500 stores by the end of the year. Photo by VnExpress
The capital injection, expected this quarter, is meant to fund business development and expansion.

Bach Hoa Xanh, incorporated in 2015, sells vegetables, seafood, meat, and fast-moving consumer goods (FMCG). As of last September it accounted for 4 percent of the company’s sales, with the rest coming from MWG’s two main businesses: consumer electronics and mobile phones.

But the company expects Bach Hoa Xanh to become a new growth engine from 2019-2020 onwards, when the phone and electronics markets begin to enter the saturation phase.

It is confident that with its experience in building and managing retail chains, it will be able to succeed with Bach Hoa Xanh as the FMCG sector enters a phase of rapid growth in the country.

But analysts warn that FMCG is not an easy industry with its shorter product life cycles, greater supply chain complexities and huge difference from electronics in terms of business conditions.

In its first few years Bach Hoa Xanh was plagued by low revenues. Analyses by securities companies pointed out issues such as poor location and lack of standardization of stores, narrow market segment, and fierce competition.

The company had originally planned to set up 1,000 stores by the end of 2018 but cut this goal by half.

It then changed its business strategy to open stores in places 30-40km outside Ho Chi Minh City to cater to demand in semi-urban areas. The company also began to standardize its outlets, closing around 100 that were not profitable.

By the end of 2018 there were 400 stores which contributed around VND4.3 trillion ($185.28) to Mobile World Investment Corporation's revenues.

Vnexpress

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