Rural markets “rescue” producers

As big urban markets have become saturated, manufacturing and retail enterprises flock to rural areas. This is really a good decision as the market has helped them raise sales.

From Pleiku, Ngo Nguyen Kha, Deputy Director of MobiStar Technology Company, a MobiStar mobile phone distributor, caught a coach to Dak Nong. After two days of conducting the market survey, Kha caught a bus back to HCM City at 6 pm. He just had enough time to have breakfast with family members the next morning before going to the office to discuss the plan to bring mobile phone products to rural areas. At 5 pm of the same day, Kha again left for Dong Thap, An Giang, Hau Giang and Kien Giang.

Tramping to look for new markets

When asked why he decided to survey the market with coach and bus, Kha said that he discovered a lot of interesting things during the trips. “I could measure the demand for mobile phones and the consumption habit of local consumers,” he said.

Khoa not only successfully discovered the purchasing power of the products distributed by his company, but also found out what customers expect from manufacturers and distributors.

“In big urban areas, customers would prefer price discounts, while in rural areas, people like gifts additionally offered with the products, such as electric cookers or tea sets,” he said. “If you apply the same sale strategy in cities and rural areas, you may fail to attract customers.”

The Gioi Di Dong, a well known mobile phone distributor, has also reached out to provinces by opening more retail points there. According to Nguyen Duc Tai, General Director of The Gioi Di Dong, the retail chain has set up 100 new retail shops so far this year, each of which needs the investment capital of three billion dong. It plans to have 200 retail points throughout the country by the end of 2011, most of which are in provincial markets.

Rural markets help increase sales

In the first eight months of 2011, the total revenue of Nutifood increased by 30 percent in comparison with the same period of the last year, of which a big proportion came from rural markets.

“We have opened more retail points in rural areas and displayed our products in order to heighten consumers’ awareness about the products,” said Tran Huu Duc, Public Relation Director of Nutifood.

Also according to Duc, by the end of 2011, rural areas would bring 50 percent of total revenue of Nutifood.

“Don’t think that consumers in provinces do not have money to buy high grade products,” he said. “The thing you need to do is to organize your distribution network in the way which allows consumers to access high value products.”

Vissan, a food supplier, sold 3000 billion dong worth of products in the first 8 months of the year. Phan Van Dung, Market Director of Vissan, said that the company is gathering strength to exploit the rural market, having spent 15 billion dong on the plan to develop the distribution network in the areas.

At present, 70 percent of sausage products and 40 percent of canned food are being consumed in rural markets.

Bidrico considers rural markets as its main market. Every time when launching new products, Bidrico usually introduces the products in provinces first, and then in HCM City. Nguyen Dang Hien, General Director of Bidrico, said that the company focuses on rural areas because the competition in the markets is not too stiff.

Rural market more promising than expected

Nguyen Nu Tuyet Hong, Analysis Director of TNS, a market survey firm, said producers and distributors now tend to drive their concentration to the rural markets. Hundreds of sale campaigns in rural areas have been launched.

Nguyen Huu Ngoc Tran, Managing Director of Vinamilk, also said that rural areas, where 69 percent of the Vietnamese population is living, consume 46 percent of fast moving consumer goods.

Besides essential goods, expensive products and high grade goods are also selling well in rural markets. Tai from The Gioi Di Dong said that a retail point in rural areas has the turnover of 100 million dong a day. In principle, The Gioi Di Dong will close a retail point if it continues taking a loss for three consecutive months. However, to date, no retail point has been closed.

Source: TBKTVN

Tags: Vietnam retail, vietnam retail industry, Vietnam retail market, Vietnam super markets