Thai people overwhelm retail ‘games’ in Vietnam

Compared to foreign businesses, Thai companies are overwhelming in the Vietnamese retail market after a series of M&A deals worth billions of USD.

In 2013, the General Statistics Office data showed that total retail sales of goods and consumer services in Vietnam reached about VND 2.6 million. By 2017, the purchasing power of the whole market increased by 51%, reaching over VND 3.9 million billion.

In the last 5 years, the growth rate of the Vietnamese retail market has reached an average of over 10% per year.

According to the regulator, the retail market is currently divided into 8 segments with the presence of many large businesses in the world. Large segments such as hypermarkets, shopping malls, complex shopping centers, mini supermarkets, convenience stores, electronics supermarkets, online retail …

“Cover arm” of the Thai giants

Sharing at the recent Vietnam Retail and Marketing Investment Forum, Ms. Le Viet Nga, Deputy Director of Domestic Market Department (Ministry of Industry and Trade), said that foreign enterprises currently have the most segments in the selling market. Retail Vietnam is Central Group (Thailand).

Accordingly, this group is present in a series of segments from the largest hypermarket to the BigC system; Robins trade center; supermarket with Lan Chi Mart chain; Nguyen Kim Electronic Supermarket; C-Express convenience store; along with a number of other small retail stores Marks & Spencer; Komonoya; New Balance; Fila; Mizuno …

BigC is the largest retail chain of supermarket models in Vietnam today. Photo: Quynh Danh.

In fact, few foreign businesses own many retail segments like Central Group.

Currently, the group operates and manages more than 200 shopping centers, stores nationwide, 2 online sales channels. Specifically, including 2 commercial centers, 35 hypermarkets, 25 supermarkets, 55 electronics supermarkets …

The only market Central Central is currently losing is the convenience store when C-Express has not had the necessary coverage such as Circle K, Bach Hoa Xanh or Vinmart + …

To become the business that covers most retail segments of the Vietnamese market, Central Group had to spend up to US $ 5.5 billion in the period of 2016-2018, a small amount of money that many investors could not invest. Central Group is also not the only Thai enterprise with ambitions in the retail sector in Vietnam.

Metro supermarket system is the largest distribution chain of supermarket models in Vietnam in terms of the size of each selling point. In the financial year 2014-2015, the revenue of this chain reached more than 13,500 billion.

Once owned by German owners, however, in January 2016, Metro supermarket chain was sold to TCC Holdings of Thailand for 655 million Euro, equivalent to 16,000 billion VND.

TCC Holdings is a wholly owned subsidiary of Thai billionaire Charoen Sirivadhanabhakdi, who is also the biggest boss at Saigon Beer.

After returning to Thai people, Metro was renamed to Mega Market Vietnam but maintained the hypermarket model with 19 operation centers.

The latest financial figures that this company announced that in 2016, the whole system reached 11,700 billion dong of revenue, but a net loss of 110 billion dong.

Explaining the reason for many years’ losses, the leader of this system said that the company is still in the stage of expanding investment. In particular, in order to maintain the supermarket model, each center of Mega Market must spend about VND 300-400 billion to invest initially.

Other foreign enterprises are weak

In addition to businesses from Thailand, the Vietnamese retail market has many notable foreign names such as Aeon, Lotte, Circle K, 7-Eleven … However, these businesses mainly focus on 1-2 fixed segment.

Aeon of Japan focuses on the commercial center segment, currently operating 4 centers in Ho Chi Minh City and Hanoi, and 1 center under construction in Ha Dong (Hanoi).

In 2017, revenue increased strongly by over 30% but this chain only reached VND 5,136 billion, far less than BigC or Mega Market.

Besides the shopping center, Aeon also owns the supermarket chain Citimart and formerly Fivimart (sold to Vingroup). In addition, the group and its partner Sojitz own the convenience store chain Ministop, but the number is still very limited.

The most famous Korean retailer in Vietnam is Lotte. But this system has just opened 1 Lotte Center shopping mall, and 15 Lottemart supermarkets across the country.

The revenue of the same system in 2017 was only VND 5,268 billion, approximately the same as Aeon Vietnam.

Recently, Auchan Retail Group of France had to resell all 18 supermarkets of the same name in Vietnam to Saigon Co.op and withdrew from the market when no longer found competitive opportunities. Auchan left is also the last Western supermarket system to withdraw from Vietnam. Casino Group previously sold BigC in 2016.

Counterbalance comes from Vietnamese enterprises

When other foreign retailers were weak against Thai giants, emerging Vietnamese distributors became a worthy counterweight to a series of sales and expansion deals.

The acquirer of Auchan chain is Saigon Co.op, the second largest retail brand in the country. By the end of the first quarter of this year, this system is managing 110 supermarkets, 4 hypermarkets, 3 shopping centers and more than 450 stores of Co.op Food and Co.op Smile …

In the latest year (2018), the entire Saigon Co.op system reached over VND 30,000 billion in revenue, of which the parent company Saigon Co.op contributed over VND 20,000 billion.

Meanwhile, Vincommerce General Trading Services Joint Stock Company, a subsidiary of Vingroup, is emerging as a major player in the retail industry after a series of sales.

Vincommerce was the buyer of the Ocean Mart supermarket chain in 2014, and spent more than 1,000 billion to acquire Nhat Nam Investment Joint Stock Company, taking over the system of 23 Fivimart supermarkets and the chain of selling Telecommunications Vien A. .

It was this same company that stood out and received 87 convenience stores Shop & Go for $ 1, after the former owner of this chain – Joint Stock Company and Vitality Corporation – gave up because of unbearable losses.

Currently, Vingroup is operating and managing 69 Vincom centers; more than 100 VinMart supermarkets; 1,700 VinMart + stores and 58 electronics stores …

In 2018, revenue from sales at supermarkets and retail chains brought Vingroup VND 19,333 billion, an increase of 48% compared to the previous year, and the group’s second-largest business after only movables.

Quang Thắng
* Source: zing News


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