Retail market sees influx of foreign investors

09:12 | 25/06/2016 Investment

(VEN) - A new wave of investment from Asian giants such as Thailand’s BJC and Central Group, Japan’s Aeon Mall and the Republic of Korea’s Emart has had a strong impact on the Vietnamese retail market in the past three years.

Retail market sees influx of foreign investors

Market entry strategies

A massive influx of foreign retailers has had a significant impact on the Vietnamese retail market. Many people have expressed worries about Vietnamese goods in distribution channels owned by foreign investors.

France’s Big C and Germany’s Metro Cash & Carry were the two earliest giants to enter the Vietnamese market, followed by the Republic of Korea’s Lotte Mart. They entered the market through investment.

These giants with strong financial resources have gradually expanded their network over the years. Big C has 32 supermarkets across the country after 18 years, while Metro Cash & Carry has 19 retail centers after 12 years until transferred to Thailand’s Berli Jucker (BJC) in 2014. Lotte Mart currently has 12 supermarkets after eight years and is planning to expand to 60 stores by 2020.

Hong Kong, China’s Circle K convenience stores have strongly developed since 2015 with a rapid increase in numbers, from 100 stores in early 2015 to 150 stores in the beginning months of this year, and are driving towards the goal of 200 stores in late 2016.

The Republic of Korea’s Emart plans to expand network in Ho Chi Minh City and some other cities and provinces throughout the country after investing US$60 million in their first supermarket in Vietnam in late 2015.

Thailand and Japan have rapidly changed the face of the Vietnamese retail market through several mergers and acquisitions.

Thailand’s BJC bought Metro Vietnam for US$879 million in 2014, while the Central Group purchased a 49 percent stake in Nguyen Kim in late 2015. In addition, the Central Group continued to shock the market after buying Big C for more than US$1 billion in late April 2016.

In addition to investment in hypermarkets, Japan’s Aeon Mall has implemented a series of M&A deals covering all segments in many forms such as shopping malls, department stores, supermarkets and convenience stores. For example, Aeon Mall shopping centers which need large areas are located in suburban areas, while department stores and supermarkets such as Aeon-Citimart and Aeon-Fivimart are in the center of the city, and convenience stores can be found throughout urban areas.

The position of Vietnamese goods

An influx of foreign retailers has had a significant impact on the Vietnamese retail market. Goods and services have become perse, while domestic consumers have more choices. However, many people have expressed worries about the position of Vietnamese goods in distribution channels owned by foreign investors.

Lotte Vietnam General Director Hong Won Sik said that Lotte Mart will develop multiple-choice destination model. Therefore, they will give maximum priority for domestic goods.

Marketing Manager at Emart Vietnam Le Huu Tinh said that Emart is a supermarket operating under the motto of cheap prices with good quality. Therefore, up to 95 percent of Vietnamese goods are available in the supermarket. In particular, Emart gathered more than 1,000 Vietnamese suppliers in Ho Chi Minh City’s GEM Center to prepare goods for the supermarket before its opening ceremony.

Many people have concerned about the position of Vietnamese goods in distribution channels owned by foreign investors after Central Group bought Big C as people suggested they would give priority for Thai goods to enter the market. In response a Central Group representative said that they would carefully select products and brands from many suppliers in Vietnam, Asia and the world, and in particular were perfectly happy to find products that fit the needs of Vietnamese consumers.

Vietnamese consumer taste will go some way to determining what products sell and are available in supermarkets.

 

Cong Thuong

Theo ven.vn