Domestic supermarket chains are racing to open new stores and nail down market share before the retail sector is opened to foreign competition in January 2009, pursuant to the nation’s WTO commitments.
Sai Gon-Nguyen Kim Co Ltd is the latest domestic concern to stake out a retail niche with the opening of the CMC Plaza shopping centre in Ho Chi Minh City.
The new centre covers an area of 4,000 sq.m and can accommodate 10,000 visitors a day, according to its marketing director, Phan Linh Phuong.
Sai Gon-Nguyen Kim intends that the centre will anchor a nationwide chain of nine supermarkets, Phuong said, in such major markets as HCM City, Ha Noi, Can Tho, and Da Nang as well as Binh Duong province.
As part of the trend of globalisation and the increase in consumer purchasing power, supermarkets were expected to seize up to 20 percent of the nation’s retail market by 2010, Phuong said.
At least five new supermarkets have opened recently in HCM City, including Vinatexmart, Co-op Mart Bien Hoa and Citimart, bringing the latter chain, owned by Dong Hung Ltd. Co, to eight stores nationwide.
Dong Hung deputy director Ngo Van Hai said the boom in new supermarkets in major cities and provinces reflected a race against time to grab market share before the Government allowed foreign-invested enterprises to open supermarkets and increase competition in goods distribution and retail.
There is plenty of room for growth in the retail sector, recently market surveys have suggested.
Consumer demand for home electronics in Viet Nam could reach 3 billion USD a year, while actual retail sales currently only reached 1.2-1.3 billion USD, according to market research conducted by GfK Viet Nam and AC Nielsen Viet Nam.
A recent report by RNCOS, a market research consulting firm, said that the retail sector in Viet Nam would experience rapid changes between 2007 and 2011, becoming one of the seven most profitable retail markets in the world, with overall growth in the retail market faster than anywhere in the world outside of China and India.
With foreign investors at the gate, an issue of worry to both domestic and foreign investors is the shortage of suitable sites in urban areas for developing supermarkets and shopping centres.
A supermarket occupies an average area of 2,000 sq. and needs to be located in an area accessible to consumers.
According to real estate services firm CB Richard Ellis, land lease rates for prime building sites would likely increase 200 percent or more over the next three years, forming a potentially insurmountable barrier for domestic retailers trying to stake out the market.
Closer coordination was needed between owners of ideal locations and retail distributors to establish a competitive domestic retail sector.
Source: VNE
Showing posts with label Retail. Show all posts
Showing posts with label Retail. Show all posts
Tuesday, July 24, 2007
Friday, July 13, 2007
Vietnamese people changing their consumption habits
There will be big changes in the shopping and consumption habits of Vietnamese people, according to research conducted by the Trade Research Institute.
The institute has forecast that the final consumption fund (referring to the amount of money consumers put aside for consumption) in comparison with Vietnam’s GDP may reach VND840-860bil ($50bil) in three years
In the last few years, Vietnam has ranked third in the world in terms of consumption ratio. Vietnamese people have been spending more money to satisfy their demands, while middle-class consumers have appeared.
Nguyen Van Nam, Head of the Trade Research Institute, talks more about that.
What will the big changes in the consumption habits of Vietnamese people be like in the next three years?
There will be big changes in the consumption habits of Vietnamese people. They will require not only good food and fine clothing, but also choose the kinds of food that are good for health. A recent survey announced by TNS Market Research showed that 62% of Vietnamese people do not eat at home every day. The consumption style will also be different: more spending and less saving in young families.
Will traditional Vietnamese products like fish sauce, seasoning powder, instant noodles, vegetable oil, green tea and coffee be affected by the new consumption habits?
All Vietnamese people use these products everyday as a long-standing habit, no matter if they eat at home or restaurants. All the tastes and habits of Vietnamese consumers will stay the same.
However, the requirements of new consumers will be stricter as they will demand safer and cleaner products. This will bring more opportunities to Vietnamese enterprises, while also be a big challenge for them.
Let me take the case of the soy sauce with the high level of 3-MPCD as an example. Since the information about the toxic substance was released consumers have ‘boycotted’ the unsafe product, a move that shows that consumers now have behaviour different from what they did before.
What should you do to control the quality of goods?
Someone may fear that the opening of the distribution market to foreigners will kill the domestic distribution network. However, they should realise that many bad-quality products, including China-sourced ones, can be seen everywhere on the domestic market due to many reasons. One of the reasons is the bad domestic distribution network.
Vietnamese producers should understand that only good-quality products can be sold, while distributors should distribute good-quality products only.
Why do you say that the bad distribution network is the reason behind the bad-quality imports?
Local distributors now sell everything they can, both the good and bad products. Meanwhile, if foreign distributors can operate on the market, they will standardise sale items: i.e. only good and safe products will be put on sale. Bad-quality products will have no room in their distribution chains. I also have to say that the backward distribution network will not help encourage production, and cannot meet the demand of modern consumers.
Thailand once had the same fear as Vietnam when it opened its retail market. However, the result of the market opening was very good: the quality of its products has become better and its export turnover is 10-fold higher than Vietnam’s.
Source: VNE
The institute has forecast that the final consumption fund (referring to the amount of money consumers put aside for consumption) in comparison with Vietnam’s GDP may reach VND840-860bil ($50bil) in three years
In the last few years, Vietnam has ranked third in the world in terms of consumption ratio. Vietnamese people have been spending more money to satisfy their demands, while middle-class consumers have appeared.
Nguyen Van Nam, Head of the Trade Research Institute, talks more about that.
What will the big changes in the consumption habits of Vietnamese people be like in the next three years?
There will be big changes in the consumption habits of Vietnamese people. They will require not only good food and fine clothing, but also choose the kinds of food that are good for health. A recent survey announced by TNS Market Research showed that 62% of Vietnamese people do not eat at home every day. The consumption style will also be different: more spending and less saving in young families.
Will traditional Vietnamese products like fish sauce, seasoning powder, instant noodles, vegetable oil, green tea and coffee be affected by the new consumption habits?
All Vietnamese people use these products everyday as a long-standing habit, no matter if they eat at home or restaurants. All the tastes and habits of Vietnamese consumers will stay the same.
However, the requirements of new consumers will be stricter as they will demand safer and cleaner products. This will bring more opportunities to Vietnamese enterprises, while also be a big challenge for them.
Let me take the case of the soy sauce with the high level of 3-MPCD as an example. Since the information about the toxic substance was released consumers have ‘boycotted’ the unsafe product, a move that shows that consumers now have behaviour different from what they did before.
What should you do to control the quality of goods?
Someone may fear that the opening of the distribution market to foreigners will kill the domestic distribution network. However, they should realise that many bad-quality products, including China-sourced ones, can be seen everywhere on the domestic market due to many reasons. One of the reasons is the bad domestic distribution network.
Vietnamese producers should understand that only good-quality products can be sold, while distributors should distribute good-quality products only.
Why do you say that the bad distribution network is the reason behind the bad-quality imports?
Local distributors now sell everything they can, both the good and bad products. Meanwhile, if foreign distributors can operate on the market, they will standardise sale items: i.e. only good and safe products will be put on sale. Bad-quality products will have no room in their distribution chains. I also have to say that the backward distribution network will not help encourage production, and cannot meet the demand of modern consumers.
Thailand once had the same fear as Vietnam when it opened its retail market. However, the result of the market opening was very good: the quality of its products has become better and its export turnover is 10-fold higher than Vietnam’s.
Source: VNE
Friday, June 29, 2007
Vietnam's retail market attractiveness falls back
AT Kearney has released its report on the Global Retail Development Index (GRDI), selecting the 30 economies that have the most attractive retail markets in the world, in which Vietnam ranks fourth, after India (92 marks), Russia (89 marks) and China (86 marks).
The fourth position for Vietnam proves to be a step back compared to the ranking Vietnam held in the previous AT Kearney report. In 2004, Vietnam ranked 7th in GRDI (after Russia, India, China, Slovenia, Croatia and Latvia). The ranking did not improve in 2005 (8th) even with Vietnam obtaining 79 marks. However, Vietnam made a big leap in 2006 when the country jumped into the third position. Therefore, it should be considered a step back with Vietnam falling to fourth position this year.
Over the last three years, from 2004 to 2006, Vietnam’s gained eight marks more only, while it lost 10 marks just in one year, 2007, and this, according to experts, is worth worrying about as it shows unstable development, thus making Vietnam’s retail market less attractive.
AT Kearney has selected the most attractive retail markets in the world among 185 countries based on four criteria: country risks, market attractiveness, market saturation level and time pressure.
Vietnam has made improvement in terms of country risks, but at a slow pace. In 2004, Vietnam got 52 marks, in 2005, it got 54 marks, in 2006: 43 points, and in 2007: 57 marks. Meanwhile, in 2007, China got 75 marks, Russia 62 marks, while India, 67 marks.
Vietnam made the most encouraging improvement in terms of attractiveness, but the improvement proves to be far below the one gained by the three other countries. Vietnam got 29 marks in 2004 and 2005, 24 marks in 2006 and 34 marks in 2007, much lower than India (42 marks), China (46), and Russia (52).
Meanwhile, Vietnam’s saw sharp declines in the other two criteria: it got 90 marks for market saturation level in 2004, 88 marks in 2005, 87 marks in 2006 and 76 marks only in 2007. The biggest problem occurred with the last variable, time pressure. Vietnam got 59 only in ‘time pressure’, falling by 22 marks over the previous year, a big fall considering that China lost four marks only over the last year. India got 74 marks, China 84 and Russia 90.
Source: VNE
The fourth position for Vietnam proves to be a step back compared to the ranking Vietnam held in the previous AT Kearney report. In 2004, Vietnam ranked 7th in GRDI (after Russia, India, China, Slovenia, Croatia and Latvia). The ranking did not improve in 2005 (8th) even with Vietnam obtaining 79 marks. However, Vietnam made a big leap in 2006 when the country jumped into the third position. Therefore, it should be considered a step back with Vietnam falling to fourth position this year.
Over the last three years, from 2004 to 2006, Vietnam’s gained eight marks more only, while it lost 10 marks just in one year, 2007, and this, according to experts, is worth worrying about as it shows unstable development, thus making Vietnam’s retail market less attractive.
AT Kearney has selected the most attractive retail markets in the world among 185 countries based on four criteria: country risks, market attractiveness, market saturation level and time pressure.
Vietnam has made improvement in terms of country risks, but at a slow pace. In 2004, Vietnam got 52 marks, in 2005, it got 54 marks, in 2006: 43 points, and in 2007: 57 marks. Meanwhile, in 2007, China got 75 marks, Russia 62 marks, while India, 67 marks.
Vietnam made the most encouraging improvement in terms of attractiveness, but the improvement proves to be far below the one gained by the three other countries. Vietnam got 29 marks in 2004 and 2005, 24 marks in 2006 and 34 marks in 2007, much lower than India (42 marks), China (46), and Russia (52).
Meanwhile, Vietnam’s saw sharp declines in the other two criteria: it got 90 marks for market saturation level in 2004, 88 marks in 2005, 87 marks in 2006 and 76 marks only in 2007. The biggest problem occurred with the last variable, time pressure. Vietnam got 59 only in ‘time pressure’, falling by 22 marks over the previous year, a big fall considering that China lost four marks only over the last year. India got 74 marks, China 84 and Russia 90.
Source: VNE
Friday, June 15, 2007
Comeco builds depot to import oil products
Vietnamese petrol station operator Comeco (COM) said on Wednesday it plans to import oil products when its oil depot and terminal is completed next year.
"Currently we are only a distributor for state oil product importers but with the new facility we will be able to become an importer ourselves" a senior company official told Reuters.
Vietnam, which allows only 11 state-run companies to import oil products, has said it would consider applications from domestic private firms to import fuel but they must have suitable infrastructure such as oil depots and terminals.
The domestic oil products market, which is expected to consume around 4 million tonnes of gasoline this year, is dominated by state-run Petrolimex. Its share is about 60%.
Comeco, which expects revenues of nearly $117 million this year, said it would invest nearly $8 million in its 40,400 cubic metre oil depot in the industrial hub Dong Nai province, near Ho Chi Minh City in the initial phase of the project.
The project also includes a terminal that could accommodate tankers of between 25,000 and 36,000 dead-weight-tonnes.
"Our plan is to raise the tank capacity to 100,000 cubic metres in the second phase of the project to supply to our expanded petrol stations network," said the official, who declined to be identified.
He said the company, which operates around 32 retail outlets in Ho Chi Minh City, would build new filling stations in other southern provinces as part of its business expansion plan.
Hanoi, which still bans foreign firms from the gasoline retail markets, has been cutting government fuel subsidies and slowly deregulating the fuel market.
In April the government for the first time decided to let importers from May 1 to set their own retail prices, a move that has triggered interest from the private sector to invest in the potentially lucrative fuel market, traders said.
Shares in Comeco rose 1.45% to close at 70,000 dong ($4.3) on Wednesday, valuing the company at 230 billion dong ($14.3 million).
Source: Reuters
"Currently we are only a distributor for state oil product importers but with the new facility we will be able to become an importer ourselves" a senior company official told Reuters.
Vietnam, which allows only 11 state-run companies to import oil products, has said it would consider applications from domestic private firms to import fuel but they must have suitable infrastructure such as oil depots and terminals.
The domestic oil products market, which is expected to consume around 4 million tonnes of gasoline this year, is dominated by state-run Petrolimex. Its share is about 60%.
Comeco, which expects revenues of nearly $117 million this year, said it would invest nearly $8 million in its 40,400 cubic metre oil depot in the industrial hub Dong Nai province, near Ho Chi Minh City in the initial phase of the project.
The project also includes a terminal that could accommodate tankers of between 25,000 and 36,000 dead-weight-tonnes.
"Our plan is to raise the tank capacity to 100,000 cubic metres in the second phase of the project to supply to our expanded petrol stations network," said the official, who declined to be identified.
He said the company, which operates around 32 retail outlets in Ho Chi Minh City, would build new filling stations in other southern provinces as part of its business expansion plan.
Hanoi, which still bans foreign firms from the gasoline retail markets, has been cutting government fuel subsidies and slowly deregulating the fuel market.
In April the government for the first time decided to let importers from May 1 to set their own retail prices, a move that has triggered interest from the private sector to invest in the potentially lucrative fuel market, traders said.
Shares in Comeco rose 1.45% to close at 70,000 dong ($4.3) on Wednesday, valuing the company at 230 billion dong ($14.3 million).
Source: Reuters
Saturday, May 26, 2007
Mekong Capital invests in Mobile Phone World
Mekong Capital will pump 4.5 million USD into national retail chain Mobile Phone World, announced Mekong Capital General Director Chris Freund, on May 25.
“We are pleased to utilise our Mekong Enterprise Fund II to invest in Mobile Phone World. This is one of the most impressive companies that we have had contact with in Viet Nam, based on the strategic vision of their management staff and their capacity to implement its plan,” said General Director Chris Freund.
The 50 million USD Mekong Enterprise Fund II was established to scout out unlisted companies and well run private companies that retain a high potential for growth.
Director of Mobile Phone World Nguyen Duc Tai said the company has been able to create a supermarket system after two years of operations that has seen the firm record the highest cell phone unit sales in the country.
Source: VNA
“We are pleased to utilise our Mekong Enterprise Fund II to invest in Mobile Phone World. This is one of the most impressive companies that we have had contact with in Viet Nam, based on the strategic vision of their management staff and their capacity to implement its plan,” said General Director Chris Freund.
The 50 million USD Mekong Enterprise Fund II was established to scout out unlisted companies and well run private companies that retain a high potential for growth.
Director of Mobile Phone World Nguyen Duc Tai said the company has been able to create a supermarket system after two years of operations that has seen the firm record the highest cell phone unit sales in the country.
Source: VNA
Monday, May 21, 2007
Vietnamese retail market takes up “chain” system
Viet Nam’s retail industry is in for changing as goods distributors adopt the “chain store” system, a move that will strongly develop in the future, according to the Trade Ministry.
The Viet Nam Garment and Textile Corporation has already established its chain of 17 fashion supermarkets and shops trademarked Vinatex and Intimex Import-Export Corporation has set up a chain of eight Intimex supermarkets in big cities.
The development of supermarket chain which will help Vietnamese businesses better compete with world retailers, is predicted to be a trend of development in Viet Nam.
Many enterprises are planning to form and develop their own chain systems under the mode of franchise, including the G7 Trade and Service Joint Stock Co. with G7 Mart system, the Hoang Corp. with 24-Seven system and the Pham Trang Co. Ltd with Small Mart 24h/7 system.
The ministry said that alliances are formed from a combination of businesses’ strengths of capital, land, management experiences and trademarks. The coalition will change the face of the domestic distribution market in line with the regional and world development trend.
Source: VNA
Saturday, April 14, 2007
Retailer Intimex offered equity to public
A small Vietnamese supermarket operator, which is also a leading exporter of robusta coffee and pepper, raised 269.3 billion dong ($16.7 million) by selling 33.66% of its shares to the public, the stock market said on Friday.
Intimex Import-Export Corporation sold all 1,682,800 shares on offer to domestic investors in the IPO on Thursday, the over-the-counter Hanoi stock market said in a statement. It did not disclose the identities of buyers.
The shares were sold at an average price of 160,025 dong ($9.93), way above the 10,200-dong initial price set for bids, suggesting the firm was valued at $49.65 million, or nearly twice the book value of $27.2 million in its own assessment.
Hanoi-based Intimex did not say when it planned to list its shares or how the proceeds would be invested.
Employees in the company, which is controlled by the Trade Ministry and 45% owned by the state, hold a 21.34% stake.
The company has been running a number of supermarkets in Hanoi and several northern locations since 2001. But Intimex is known more abroad as the exporter of robusta coffee and pepper. Vietnam is the world's top exporter of the two commodities.
Intimex has projected its gross profit next year to rise 16.7% to 6.08 billion dong ($377,300) from 5.21 billion dong expected this year.
Intimex Import-Export Corporation sold all 1,682,800 shares on offer to domestic investors in the IPO on Thursday, the over-the-counter Hanoi stock market said in a statement. It did not disclose the identities of buyers.
The shares were sold at an average price of 160,025 dong ($9.93), way above the 10,200-dong initial price set for bids, suggesting the firm was valued at $49.65 million, or nearly twice the book value of $27.2 million in its own assessment.
Hanoi-based Intimex did not say when it planned to list its shares or how the proceeds would be invested.
Employees in the company, which is controlled by the Trade Ministry and 45% owned by the state, hold a 21.34% stake.
The company has been running a number of supermarkets in Hanoi and several northern locations since 2001. But Intimex is known more abroad as the exporter of robusta coffee and pepper. Vietnam is the world's top exporter of the two commodities.
Intimex has projected its gross profit next year to rise 16.7% to 6.08 billion dong ($377,300) from 5.21 billion dong expected this year.
Tuesday, February 27, 2007
Supermarts will hold up to 20% of retail market share by 2010
The Government has approved the strategy on domestic trade development by 2010 and 2020, which said that by 2010, modern distribution channels will amount to 20% of the market share.
Trade centres, supermarkets and convenient stores will have the turnover of 160 trillion VND (10 billion US$) by 2010, holding up to 20% of the total trade turnover, and 800 trillion VND (50 billion US$) (40%) by 2020.
This proves to be an ambitious plan if compared to the current modest figure of 5-6%.
The Government has also laid down the policy to develop big trade groups, powerful enough to compete and cooperate with foreign distributors when Vietnam fully opens its distribution market.
By 2010, Vietnam is expected to see growth rate of the total goods and service retail turnover at 11% per annum by 2010, and more than 10% in the next period. The total goods and service retail turnover is targeted to reach 800 trillion VND by 2010 and 2,000 trillion VND (125 billion US$).
By 2010, the domestic trade will contribute 14.5% to GDP (200,000 billion VND or 12.5 billion US$), and the figure is expected to rise to 15% (450,000 billion VND or 28.125 billion US$) by 2020.
It took the Ministry of Trade two years to compile the strategy on domestic trade development. This is considered a very important plan, which aims to build up a healthy domestic trade, which is based on the suitable structuring of distribution channels, in which modern distribution modes will play the key role.
Source: VNE
Trade centres, supermarkets and convenient stores will have the turnover of 160 trillion VND (10 billion US$) by 2010, holding up to 20% of the total trade turnover, and 800 trillion VND (50 billion US$) (40%) by 2020.
This proves to be an ambitious plan if compared to the current modest figure of 5-6%.
The Government has also laid down the policy to develop big trade groups, powerful enough to compete and cooperate with foreign distributors when Vietnam fully opens its distribution market.
By 2010, Vietnam is expected to see growth rate of the total goods and service retail turnover at 11% per annum by 2010, and more than 10% in the next period. The total goods and service retail turnover is targeted to reach 800 trillion VND by 2010 and 2,000 trillion VND (125 billion US$).
By 2010, the domestic trade will contribute 14.5% to GDP (200,000 billion VND or 12.5 billion US$), and the figure is expected to rise to 15% (450,000 billion VND or 28.125 billion US$) by 2020.
It took the Ministry of Trade two years to compile the strategy on domestic trade development. This is considered a very important plan, which aims to build up a healthy domestic trade, which is based on the suitable structuring of distribution channels, in which modern distribution modes will play the key role.
Source: VNE
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