Foreign investors spark stiff retail competition

Since big distribution groups from around the world have been granted the right to join Vietnam’s market, a race to obtain market shares has heated up past the boiling point.

Among foreign-invested retailers in Vietnam, Big C is a well known name. It is not only because the retailer has been present in Vietnam for a long time, but also for its reasonable pricing policies. Big C understands that Vietnamese consumers prefer low price products, therefore, they have been successful.

When foreign-invested supermarkets like Big C offer price reductions, consumers benefit. Yet this harms domestic retailers. Nguyen Thi Phuong Thao, Director of Maximark Cong Hoa, argues that selling products below cost is an unhealthy form of competition.

Price wars significantly influence supermarket sales. HCM City now has 76 domestic supermarkets, including 11 first class, large-scale supermarkets such as Maximark Cong Hoa which covers an area of 20,000 square meters, Binh Dan Supermarket at 9000 square meters, Giay Viet (Vietnam’s shoes) has 8200 square meters and Van Lang Culture offers 8000 square meters.

According to DauTu, however, domestic supermarket revenues are just equal to 35 percent of a foreign-invested supermarket.

Regarding the workforce, though having more advantages than foreign-invested enterprises in training staff, domestic retailers still cannot attract talented employees. Domestic supermarkets cannot pay high salaries, while foreign-invested retailers can. Workers naturally apply to places paying high salaries.

“That explains why in the last few years, Maximark has become a centre that trains supermarket workers for foreign-invested supermarkets,” Thao from Maximark Cong Hoa commented.

“On average, a worker of Maximark gets 2.5 million dong a month. Meanwhile, some foreign retailers are ready to pay triple to lure good staff who have experience or are heads of sales teams,” she added.

In the near future, competition for workers will become even stiffer, especially, when more big retail groups land in Vietnam.

By 2018, Lotte plans to set up 30 trade centres in Vietnam in big cities like Hanoi, Hai Phong, HCM City and Can Tho. Hong Pyong Gyu, General Director of Lotte Vietnam calculated that the company will recruit nearly 100 workers for each one.

He went on to say that Lotte will also expand its business in Vietnam by merging and purchasing Vietnamese companies operating in the same field.

Dau tu

Tags: Vietnam retail market, Vietnam Retail Sales