Retailers need to box clever to richly prosper

Vietnam’s retail market competition is set to heat up as foreign-backed and local distributors fight for greater market share amid slowing growth in the sector.

According to the General Statistics Office, revenue from retail sales in the first half of the year was estimated to reach VND912 trillion ($44.3 billion), up 22.6 per cent against the same period last year.

However, Vietnam Retailers Association general secretary Dinh Thi My Loan said the real growth rate of the market was only 7 per cent because of the slide in prices.

“This is a very low growth rate as compared to the 15-20 per cent range in previous years,” Loan said.

“Both foreign and domestic distributors in Vietnam are under pressure to increase market share,” she noted.

Big C, managed by the Casino Group, has unveiled a 50 per cent discount on 4,000 products until August to thank its customers and mark its 13th birthday.

The firm now has a presence in nine cities and provinces across Vietnam.

Meanwhile, Metro Cash & Carry, which entered in Vietnam in 2002 and now has 13 stores in 11 cities and provinces across the country, also ran a promotional campaign with awards of nearly $300,000.

Vu Thi Hau, deputy general director of local-owned supermarket chain Fivimart, said: “The domestic retail market is facing tough competition from foreign retailers, then there is rising inflation and falling consumer confidence. We are trying to hold onto market share and make a profit.”

She added competition was unavoidable and benefited customers. “We accept reducing part of our profits to ensure the good prices for customers and increase our competitive edge,” Hau said.

Fivimart offers promotion each month to attract clients such as their golden day in May strategy.

Alongside promotions, both foreign and local retailers are plumping for own brands. These are especially popular given current high inflation because store brands offer the same quality but carry price tags some 15-30 per cent lower.

Metro Cash & Carry Vietnam, with six brands, is considered an own brand pioneer while Co-Op Mart chain has also marketed its own brand products in collaboration with 45 producers such as Kinh Do, Lix detergent, Saigon Paper and Dong Nai foodstuff processing factory.

The current slowdown has failed to put the brakes on Vietnam’s retail sector with foreign-invested firms not put off by a slide in the country’s global retail development index. South Korea’s retail giant E-mart and Japan’s AEON Co.Ltd plan to jump into the market while existing foreign-invested Family Mart is looking to upsize from its current six stores to a massive 100 stores in 2011. – VIR

Tags: vietnam retail industry, Vietnam retail market