Many convenience stores shut down as market is too harsh
More foreign retailers have flocked to Vietnam as they believe the market is promising. But many retailers have had to leave because of stiff competition.
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Three years ago, The Gioi Di Dong, the largest mobile phone distribution chain, launched Bach Hoa Xanh, a home appliance distribution chain with an ambitious plan. However, it has cut the number of shops it plans to open in 2018 from 1,000 to 500.
7-Eleven, when arriving in Vietnam, announced a plan to open 1,000 convenience stores by 2027, which means that it needs to open 100 stores each year. However, after one year of operation, it has opened 18 stores.
Family Mart, a big player from Japan, stated that it would have 1,000 shops by 2020 in Vietnam. However, in 2017, the retailer had to rethink Vietnam. The leaders of the chain said that it cannot pour more resources for investment.
To open one convenience store in HCMC, Family Mart has to spend US$100,000, or VND2.2 billion. However, the low revenue cannot cover the high expenses.
Family Mart shut down some stores in HCMC because of business performance, high rent and other reasons. It now has 136 stores in HCMC, and 24 in Binh Duong and Vung Tau.
In 2006, G7 Mart of Trung Nguyen said it would open 9,500 shops all over the country. However, the chain quickly went downhill after a short period.
In 2011, Trung Nguyen decided to develop Ministop, a Japanese convenience store chain, in Vietnam under a franchise contract. It planned to open 500 stores within five years. However, because of the poor business performance, Ministop said goodbye to Trung Nguyen and found a new partner.
Joining hands with Sojitz, Ministop set up a plan to develop 800 shops in 2018 and 115 have been opened so far.
Vissan, a meat supplier, recently closed 60 out of its 100 convenience stores. Explaining this, Vissan said the sales were unsatisfactory, while the retail premises rent was high.
Dinh The Hien, an economist, commented that convenience stores now have too many rivals in the retail and non-retail sectors.
The biggest advantage of supermarkets is that it has a wide range of products, thus offering many choices to customers. Meanwhile, groceries are small but it is convenient as it is located in residential quarters and the prices are reasonable.
Hien said Vietnamese will need more time to change their consumption habits and get accustomed to convenience stores.
