G7 mart chain collapses ‘cause it cannot connect manufacturers

G7 mart chain, developed by Trung Nguyen Joint Stock Corporation, the giant that owns G7 coffee brand, has nearly stopped operation. The biggest problem of the chain, according to economists, is that it cannot connect manufacturers.

To date, the G7 Mart chain only has one supervisor and two salesmen who are in charge of distributing goods within its network in HCM City. Four years ago, no one could imagine that the chain may collapse one day, especially when they heard Dang Le Nguyen Vu, a well known businessman, Chair of Trung Nguyen, announced the opening of the G7 Mart and projected a bright future for the retail chain.

Now only a few G7 marts can exist in HCM City, and they may disappear from the market in the near future

Ambition too big

Several years ago, when putting 500 G7 marts into operation, including 110 shops in HCM City, Vu stated that the aim of the G7 marts is to strongly support the plan to develop Vietnamese brand and become the domestic distribution chain which can compete with foreign distribution groups.

At that time, economists warned that with the too ambitious goal, G7 mart may meet big difficulties and challenges when coping with other domestic retail brands and foreign retailers such as Co-op pmart, Maximark or Metro.

In reply, Vu said that Trung Nguyen well prepared for G7 mart chain for a long time. Vu said that there were 160,000 retail shops, of which only 10,000 could play the decisive role in the retail revenue of manufacturers, and G7 mart would target the 10,000 shops, which then belonged the distribution chains of the manufacturers.

The aim of G7 mart led to the fact that G7 mart chain confronted directly to manufacturers and goods suppliers. As a result, it could not get good products for sale, and could not sell products at low prices to compete with rivals.

The thing that happened with G7 in the last four years was that it always had to buy goods at high prices, and sometimes, could not buy products for reselling.

A supervisor, who once worked for G7, said that of the 1000 products distributed by G7 mart chain, 80 percent had the sale prices higher than other distributors. It was because G7 failed to negotiate with manufacturers to get low prices. Salable products were provided to G7 in dribs and drabs, which led to the fact that G7 mart could not gain the confidence from clients.

Only the brand name still exists

According to Le Dang Doanh, a well known economist in Vietnam, one of the reasons behind the collapse of G7 mart chain is the too big ambition of the corporation, while retailing is the sector where enterprises have to compete fiercely.

Besides, Doanh said that G7 mart made a too big step when it kicked off the retail chain, if comparing with its financial capability. He also thought that the main problem was that G7 could not connect manufacturers, which could be seen as a big lesson for other retailers.

The decision of Trung Nguyen to use logistics services provided by another company also made G7 mart’s products uncompetitive. The high prices and the delivery mode followed by G7 mart made the retailer lose clients gradually.

“Coming, putting down goods, taking money and leaving – the delivery mode was not accepted by any clients,” the above said supervisor said.

Just after a period of operation, G7 mart lost the northern market, and then the central region and the west of the southern region. Now it only has HCM City market after four years of operation. The distribution chain now only has several officers, who are trying to clear the stocks. In the past, there were more than 100 convenience stores bearing G7 mart brand in HCM City, but the number has been halved.

Source: SGTT

Tags: G7 mart