Chain stores to answer consumer needs

Domestic and foreign retailers are mulling over plans to develop a range of convenience store chains across Vietnam, in hopes of meeting rising consumer demand with this high-potential business model.

Nguyen Thanh Nhan, deputy general director of Saigon Co.op, Vietnam’s leading retailer shared with VIR last week that since late 2014 the firm had sought to improve their networks and continue expansion of their operations, particularly their convenience store outlets. To date, Saigon Co.op has opened 91 Co.op foodstores mostly in Ho Chi Minh City.

According to the company’s plan, Saigon Co.op will open more eight convenience stores by the end of this year and hope to maintain an average of 20-30 new openings per year across the country.

Nhan added that this was a business model with a lot of potential. With the growing spending power of middle class consumers, the Vietnamese retail market is in need of new and modern outlets.

According to Nhan, with the retail demand rocketing and foreign firms in a race to cement their positions ahead of upcoming market liberalisation, domestic retailers are preparing to compete with both local and overseas peers.

“To compete with overseas peers in the convenience store business, Saigon Co.op needs to expand their product range by selling more raw foods while other convenience stores only sell simple goods,” shared Nhan.

chain stores to answer consumer needs hinh 0

The Gioi Di Dong, a Vietnam retailer known for its 450-strong chain of bright yellow retail phone stores has announced that it would launch five new convenience stores in mid October in Ho Chi Minh City.

Dang Thanh Phong, a spokesman for the company, said the company planned to open between 30 to 50 convenience stores during 2015-2016, taking up to 15% of convenience food and grocery market. “The company’s convenience store format will be similar to Saigon Coop’s Co.op Food,” said Phong.

Vingroup, Vietnam’s leading real estate developer, a new player in the retail sector is expected to hire 10,000 employees to serve its expansion of supermarkets and convenience stores this year. The company says it will launch about 50 supermarkets and 360 convenience stores.

But it is foreign investors that are driving the growth of the local convenience store market.

In February, US chain Circle K opened its 100th outlet in Ho Chi Minh City. It has planned to launch 150 convenience stores in Vietnam this year, further securing its position in the country.

Singaporean Shop & Go has opened 126 stores since its arrival in 2005, becoming the leading convenience store chain in Vietnam.

More competition is expected as 7-Eleven, a major Japanese company, has also announced plans to enter the market in 2017.

Another Japanese retailer, FamilyMart, started its operation in Vietnam in December, 2009. So far, Family Mart has increased its number of stores to 17.

According to a recent report of Nielsen, Vietnam has great potential for the development of convenience stores, considering the number of existing convenience stores at the moment is relatively small in comparison to the size of the country’s population.

Nguyen Huong Quynh, head of Nielsen Vietnam, said there was one convenience store or mini-mart for every 21,000 residents in China and one for 1,800 in the Republic of Korea.

Meanwhile, the ratio in Vietnam is one per 69,000 residents. The number of convenience stores and mini-marts needs to triple in order to meet the demand of rising consumer needs, she said.

VIR