Distributors warn of price increases

Anticipating price hikes for many kinds of goods, large distributors are taking quick measures to prepare for the wave of price increases.

Pascal Billaud, General Director of Big C, a large supermarket joint-venture between Vietnam and France, acknowledged at a press conference on March 16 that input materials for production, especially electricity and petrol, have all increased, putting pressure on the prices of goods and services

Though goods collection still goes as usual with stable prices, distributors warn that price increases will occur in the near future. Pascal thinks daily necessities’ prices will rise dramatically

Dinh Thi Nga, from another supermarket chain in Hanoi, observed that it will be impossible to rein in prices once those of electricity and petrol have increased.

Nga remarked that no official notice from producers about price increases has been issued yet. However, they have “sent word” intimating that prices would be raided soon.

According to Nga, businesses are considering their next step. To ensure profits, they must raise prices to cover input expenses. Yet post-Tet purchasing power remains very weak and they are in fierce competition with their big rivals.

“They fear that if they raise prices now, their products will not be sold. That is the main reason forcing enterprises to think twice before raising prices,” Nga explained.

Price hikes may be unavoidable and distributors assert that they must prepare for this to best serve consumers. Storing up goods is considered the best solution.

“Storing goods to keep price stable in the long-run will be one of our main measures,” Pascal revealed, adding that his supermarket has placed ordered with producers and stored daily-use goods such as vegetable oil, fish sauce and dairy products in large quantities.

He said calculated that tomatoes are now selling at 4,900 dong per kilo at his supermarket, while on the market, they sell at 10,000 dong per kilo. To sell tomatoes at this price, the supermarket had to negotiate with farmers two or three months ago.

For some kinds of goods, the supermarket had to order several years in advance. They also had to apply the quick payment mechanism to ease the financial burdens of producers and to help them optimize production.

Other distributors offered that, now as purchasing power is weak but input materials’ prices are high, they must apply a very “flexible” policy for goods collection and distribution. They also must increase the frequency of sales promotions and increase the value of sales programs to lure more customers

Vu Thi Hau, General Director of Fivimart chain, agreed that the best way for a new product to penetrate the market is through sales promotions at supermarkets. Hau mentioned that, besides big monthly sale programs, Fivimart also organizes additional programs when necessary.

Tags: Vietnam Distributors, Vietnam prices, Vietnam retail market