Vietnam could become a “blue ocean” destination for major retailers in Thailand and the region wanting to cash in on the country’s nascent retail market, The Nation reports.
Berli Jucker earlier this year acquired a 65-per-cent stake in Thai An, which operates 41 “B’s mart” convenience stores in Ho Chi Minh City. The company opened three more B’s mart stores this month and plans to have 61 stores in this city by the end of the year. About 100 new B’s mart stores will open next year, and the company aims to have 300 in the Vietnamese capital and other major cities by 2015.
Japanese retailer Aeon has also recently opened its national headquarters in Ho Chi Minh City and is planning many retail formats in the country, including convenience stores, shopping centres and supermarkets. In December last year, the company opened its first Mini Stop convenience store in Ho Chi Minh and its first shopping centre – scheduled for completion next year – is now under construction in the capital.
Central Pattana (CPN), Thailand’s leading shopping mall developer, is also in discussions with a potential partner to develop its first shopping complex in Vietnam.
Phidsanu Pongwatana, senior vice president – retail business group, Berli Jucker, said that compared to Thailand – which is seen by the company as a “red ocean” destination where price competition in the retail market is fierce – Vietnam is seen as a market with tremendous potential for retail growth.
“We selected Vietnam as the first market to start up our modern-retail business thanks to the country’s high density of young people. Vietnam is a huge market with a population of about 90 million. Ho Chi Minh alone has about 5.9 million people, while Hanoi has 2.6 million. The majority of people are young consumers with an average age of about 28.7 years,” said Phidsanu.
He said that Vietnam’s real GDP growth rate was about 5 per cent with a 6.8 per cent inflation rate as of 2012.
“There are no major retail players in Vietnam and that fits in with our strategy to become a leader in any market in which we operate,” Phidsanu said.
He said that currently there was a total of about 250 convenience stores in Vietnam operated by different players. They included Shop & Go (77 stores), Circle K (50 stores), B’s mart (44 stores), and Mini Stop (17 stores).
Traditional traders still dominated the Southeast Asian market, said Phidsanu, but modern retailers are quickly expanding their market reach. Vietnam itself has lots of room for modern traders to grow. In total, there are only about 800 modern trade stores in Vietnam.
However, the convenience store sector in the Asia-Pacific region is showing a strong 15 per cent annual growth in terms of the number of new stores. This is followed by hypermarkets with 12 per cent, supermarkets with 11 per cent, and mini markets with 9 per cent.
Vietnam also averages 23 per cent annual growth in the sales value of fast-moving consumer goods. Beverages and liquor show the highest sales growth with a year on year increase at about 28 per cent as of last year, followed by 21 per cent for milk-based products, 19 per cent for foods stuffs, 18 per cent each for personal-care and cigarette products, and 15 per cent for household products.
“Our vision is to become a leading retail business in Vietnam and the region by adopting a multi-business, multi-format and multi-country strategy,” said Phidsanu.
He said that the company expected its B’s mart convenience stores would enjoy higher sales of Bt18,000 per store per day by the end of this year – up from the current sales of Bt16,000 per day. The company is also planning to open its first premium warehouse store in Vietnam by the first quarter of next year.