As urban children lack playgrounds, more leisure centers will be built
Though amusement and shopping centers for children are still not bringing satisfactory profits, investors remain interested in the sector.
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In early February 2017, SSI Asset Management (SSIAM), DAIWA-SSIAM II, the investment fund co-managed by SSIAM and Daiwa Corporate Investment, decided to invest in Con Cung (Pet), a business established in 2011 which now owns Concung.com, a retail chain distributing products for pregnant women and children, and the ToyCity chain.
The value of the investment deal has not been revealed, but analysts say it is no less than 7 figures.
In late 2016, Standard Chartered Private Equity (SCPE) belonging to Standard Chartered Bank, announced it would pour US$40 million, or VND1 trillion, into N Kid Corporation, which provides leisure services for children and runs tiNiWorld and ToyLand.
The investment decisions show that the market of products and services for children is very attractive, and that though leisure and shopping centers still cannot bring high profit, they continue to lure investors.
According to N Kid, the consumer goods market for children is worth US$5.2 billion. There are three market segments – healthcare, education and related services.
Consumer goods, including toys and clothes, are worth US$1.1 billion, while leisure services are worth US$700 million.
A Nielsen report in 2016 showed that 12% of Vietnamese families have children under one year old.
Many investors began pouring money into the field five to seven years ago.
As for leisure centers, Vietopia of Vikid Him Lam, Kizcity of Thai Duong Consultancy & Investment, KizWorld of KizWorld JSC, Kinder Park of The He Moi and tiNiWorld are the best known names.
The first high-end toy retail chains opened in 2007-2009, but they have been growing rapidly. These include My Kingdom of Viet Tinh Anh, ToyLand of Phuong Nga, Funny Land of Goldenkids and ToyCity of Con Cung, which are dominating large cities, where the average income is higher than in the provinces.
The profitability of the market is up to 30%. However, this is just the expected profit when the chains operate in normal conditions.
At the moment, investors have to spend big money on expanding the network, placing ads to increase the presence of the chain and launching sale promotion programs to retain clients.
An analyst said that the business field is ‘burning money quickly just like e-commerce’.
Some chains reported revenue of hundreds of billions of dong, but the profit margin is just 5-6%.
