10:43 | 22/06/2016 Society
(VEN) - Vietnamese retail businesses need to promote niche markets, seek new solutions, focus on advantageous goods and strengthen participation in mergers and acquisitions (M&A) deals in order to maintain their position in the market after seeing an influx of foreign retailers.
Franchise will help Vietnamese businesses raise more resources
Competition without hesitating
According to the Ministry of Industry and Trade, the Vietnamese retail market currently has 700 supermarkets and 132 shopping malls in addition to several hundreds of convenience stores, of which around 50 percent are owned by foreign businesses. In particular, the domestic retail market has seen fiercer competition due to the participation of Thai companies. Many people have expressed concern after Thailand’s Central Group bought Big C in late April 2016. Association of Vietnam Retailers (AVR) Chairwoman Dinh Thi My Loan said that Big C and Metro Cash & Carry were not domestic businesses. Therefore, these deals were seen as a purchase between FDI businesses.
She also said that association members have actively adapted. For example, Fivimart, Co.opMart, Hapro and Phu Thai have continuously promoted the development of distribution systems. In particular, Hapro has made greater efforts to expand its system in localities by opening a large shopping mall in Bac Giang Province and some other locations.
Nhat Nam Joint Stock Company Deputy General Director Vu Thi Hau said that Fivimart in cooperation with Aeon opened six more outlets and this figure would increase in the coming time to account for more market share.
Nhat Nam JSC has also improved its competitiveness by convenience services and organized more promotional programs to attract the interests of consumers.
VinMart under the Vingroup Joint Stock Company has targeted niche markets. In addition to spurring consumption of Vietnamese goods and promoting domestic production, Vingroup has directly participated in production of some consumer goods such as foodstuffs, beverages, household and interior products.
Vingroup has enhanced control of product quality in order to ensure clean and safe food supplies with good prices for consumers as well as has recovered and rebuilt Vietnamese specialties. These solutions have proved its efficiency as VinMart is seen as a popular brand in the eyes of domestic consumers.
Many Vietnamese retail businesses have actively cooperated with international partners to improve their capacity. Fivimart is seen as a typical example.
Fivimart sold a 30 percent stake to Japan’s Aeon Mall. Vu Thi Hau said that Fivimart was completely managed by Vietnamese people with a 70 percent stake, while the Japanese undertook training. Thanks to cooperation, Fivimart has had large changes from images to management methods.
Well-known electronics chain FPT Shop has developed from 50 in 2012 to 300 stores by the first quarter of this year. On average, FPT Shop opened seven stores a month.
FPT Shop recorded impressive sales with growth of 148 percent in 2015 compared to the previous year, reaching VND7.832 trillion. Of which, pre-tax profits reached VND180 billion, an increase of 350 percent compared to 2014.
FPT Retail’s Business Development Center Director Ngo Quoc Bao said that the corporation has achieved impressive results thanks to franchise business. In particular, FPT Retail and Intel Vietnam signed a strategic partnership agreement and became a direct importer of high-tech products from Apple.
“After four years of growth and development, FPT Shop needs more financial resources, modern administration methods and new digital models. Therefore, the corporation is expected to see new high capacity and experienced investors to help FPT Shop strongly develop in the coming period,” Ngo Quoc Bao said.
Franchise business will help Vietnamese businesses, especially small and medium-sized enterprises raise resources to improve competitiveness, creating a premise for entering foreign markets. In addition, franchise business from foreign companies will offer opportunities for Vietnamese businesses to receive prestigious brands and access advanced business and management methods.