Electronics retailers in promo war campaigns

The domestic electronic products and electrical appliances market has seen fierce competition recently with retailers reducing prices from 30 to 50 per cent.

In the past week, several large shops in Ha Noi such as Tran Anh Electronic and Computer Company, Pico Plaza, and Nguyen Kim ran a frenzy of promotional campaigns in which they cut prices by almost half.

Despite profit margins of around 4 per cent, many retailers were still cutting prices.

In some stores, LCD televisions were being sold at a loss of VND300,000 (US$15.4).

Director of Tran Anh Electronics and Computer Company Nghiem Xuan Thang said the competition on the market shown by a significant drop in prices was part of retailers’ plans to expand market shares and promote brand names.

However, not all retailers were able to finance such promotions. Only large companies with good administration and transparent corporate finance were able to operate at a loss.

In reality, most producers supported big retailers in terms of advertisements, technical services, floor space and marketing. As a result, these retailers were able to afford to cut retail prices.

Transparent finances help companies to post successfully on the stock market, which in turn, helps them attract more capital.

For example, as retailers face a shortage of capital, larger companies such as Tran Anh were able to call on capital via the securities market in the past months. Experts predicted the market for domestic electronic products and electrical app-liances would change dram-atically in the next five years.

In particular, only three types of enterprises would survive the fierce competition following the formula: 4-2-1.

Of this, the biggest companies would account for 40 per cent of the market shares; the second biggest, 20 per cent; the third, 10 per cent; and other companies would make up the remainder.

Some customers complained about price gouging during some of the promotional campaigns.

Several shops doubled their prices, then offered 30 to 50 per cent reductions in marketing campaigns while other shops sold inferior goods.

Chairman of Ha Noi Supermarkets’ Association Vu Vinh Phu said electronic products and electrical appliances were continually changing and being upgraded so retailers had to cut prices in order to lower their inventories.

Viet Nam Standards and Consumers Association’s expert Vuong Ngoc Tuan said that retailers sold inferior products during promotional campaigns without being punished due to several gaps in the Commerce Law which meant retailers were able to distort their promotions.

In order to protect consumers, relevant bodies would investigate promotional activities by checking invoices and store delivery vouchers, he added. —VNS

Tags: Vietnam electronics