Home appliances selling slowly, retailers anticipate new opportunities

Home appliance and information technology product centres are blaring with noisy sales promotions. However, in fact, they find it very difficult to boost their sales.

To attract more clients, a home appliance centre decided to offer a 40 percent discount for 100 washing machines with a famous brand. About 200 customers registered to buy the products within a day.

Washing machine shops usually sell products at manufacturers’ suggested prices. If retailers lower prices by more than 10 percent, they will not receive more products from manufacturers any more.

However, in the above case, the retailer finally reached an agreement with the manufacturer to provide enough products as per its request. “We incurred a loss with the consignment of products, but in return, more customers know our retail brand,” an executive of the centre explained. He revealed that they incurred a loss of 10 percent on the consignment, even with support from the supplier.

Vu The Du, Business Director of Vien Thong A, a big digital product distributor, has confirmed that laptops are now in oversupply. According to GfK, in July 2009 – July 2010, Vietnam imported 439,030 laptops of different kinds. Though the purchasing power was low, enterprises believed that the demand would increase at the beginning of the school year and they imported 35,000 products a month in the period from March to July 2010.

According to importers and retailers, it is estimated that the inventory volume of laptops is about 35-40 percent. Opinions still vary about the value of the inventory laptops, but a market expert has estimated that the figure could be $100 million.

In an effort to clear stocks and take back capital to do business, a lot of retailers have launched promotions and big discounts. The Gioi Di Dong, for example, is offering gifts of 200,000-3 million dong to laptop buyers, while smaller shops are offering discounts of 2-3 million dong.

The stiff competition among domestic retailers has pushed many retailers against the wall. Sources claim that many home appliance centres in HCM City are incurring heavy losses, but are still surviving because the losses can be offset by profits from real estate investments.

According to GfK, a market analysis firm, the demand for home appliances, information technology and telecom products in HCM City is worth two trillion dong a month, an attractive figure for businesses.

A business lecturer at RMIT University observed that the global financial crisis has made foreign retailers slow to penetrate Vietnam’s market. This makes it a good time for domestic developers who lack capital and experience to develop their market share.

“Joining forces with rivals to import products in big quantities to reduce prices and cooperating with with more partners to boost sales to young families are both measures we have taken to survive the current difficulties,” the director of a home appliance centre noted, adding that he hopes new opportunities will come soon.

Diversification is another strategy. A source from The Gioi Di Dong, a mobile device distributor, said in December, the retailer will begin trading home appliances as well.-Saigon tiep thi

Tags: Vietnam home appliances market