Running convenience store chains not an easy job
7-Eleven might have its own reasons to decide to enter the Vietnamese market in 2017. However, analysts warn it is not as easy to develop convenience store chains in Vietnam as many foreign investors think.
Two other foreign convenience store chains, Ministop and Family Mart, both from Japan, operate in the country. With many years’ experience in the retail sector, the two chains have experienced tough days in Vietnam.
Ministop had to say split from G7, which belonged to the Vietnamese Trung Nguyen Group, to team up with Sojitz, while Family Mart split from the Vietnamese Phu Thai Group to build a convenience store chain with B’s Mart.
Setting up the first convenience store in 2011, G7-Ministop thought it could develop rapidly by combining fast food sales and a grocery model. The G7 Mart large network with 460 shops was another reason business was expected to go smoothly.
However, things were more difficult than initially thought. Ministop plans to develop 500 convenience stores, but it can only develop 17 sale points after five years. The unsuccessful cooperation finished earlier this year, while Ministop found a new partner and vowed to develop 800 shops in Vietnam.
In mid-2014, Big C’s New Cho and C Express brands merged into one – C Express.
Starting business in 2012, C Express has 10 shops only. No new shops have opened over the last year, while the investor does not intend to expand the chain.
Analysts said C Express did not enlarge its network because, in Vietnam, 80 percent of consumers go to traditional markets, while supermarkets and convenience stores serve 20 percent of consumers only. The proportion is 40 percent in Thailand and 70-80 percent in Singapore.
There is another reason that keeps the majority of customers far away from convenience stores – high prices. A survey by a supermarket chain found that product prices are 10 percent higher at convenience stores than at supermarkets.
The representative of the supermarket chain said small-scale convenience stores cannot negotiate with manufacturers and suppliers about prices.
Aeon-Citimart’s deputy general director Nguyen Thi Anh Hoa said that running convenience stores was not an easy job.
“In Vietnam, groceries can be seen everywhere, which sell everything people need for daily life. Convenience stores will not be the choice of Vietnamese,” Hong noted.
According to Euromonitor, in 2013, the revenue from convenience stores in Vietnam accounted for 4 percent of total sales from groceries, a modest figure if compared with the average proportion of 42 percent in the region.
Ministop had to say split from G7, which belonged to the Vietnamese Trung Nguyen Group, to team up with Sojitz, while Family Mart split from the Vietnamese Phu Thai Group to build a convenience store chain with B’s Mart.
Setting up the first convenience store in 2011, G7-Ministop thought it could develop rapidly by combining fast food sales and a grocery model. The G7 Mart large network with 460 shops was another reason business was expected to go smoothly.
However, things were more difficult than initially thought. Ministop plans to develop 500 convenience stores, but it can only develop 17 sale points after five years. The unsuccessful cooperation finished earlier this year, while Ministop found a new partner and vowed to develop 800 shops in Vietnam.
In mid-2014, Big C’s New Cho and C Express brands merged into one – C Express.
Starting business in 2012, C Express has 10 shops only. No new shops have opened over the last year, while the investor does not intend to expand the chain.
Analysts said C Express did not enlarge its network because, in Vietnam, 80 percent of consumers go to traditional markets, while supermarkets and convenience stores serve 20 percent of consumers only. The proportion is 40 percent in Thailand and 70-80 percent in Singapore.
There is another reason that keeps the majority of customers far away from convenience stores – high prices. A survey by a supermarket chain found that product prices are 10 percent higher at convenience stores than at supermarkets.
The representative of the supermarket chain said small-scale convenience stores cannot negotiate with manufacturers and suppliers about prices.
Aeon-Citimart’s deputy general director Nguyen Thi Anh Hoa said that running convenience stores was not an easy job.
“In Vietnam, groceries can be seen everywhere, which sell everything people need for daily life. Convenience stores will not be the choice of Vietnamese,” Hong noted.
According to Euromonitor, in 2013, the revenue from convenience stores in Vietnam accounted for 4 percent of total sales from groceries, a modest figure if compared with the average proportion of 42 percent in the region.