Nguyen Thi Nghia, Chairwoman of Saigon Co-op supermarket chain

We have been preparing for the fierce competition expected when Vietnam opens its retail market under commitments to the WTO. Co-op is planning to expand its outlets, as well as improving service quality. By 2010, we expect there will be 40 Co-op marts nationwide.

The biggest challenge, I think, will come from the strong financial capability of foreign investors. They are capable of expanding their distribution networks very quickly by purchasing existing brands. Local operators haven’t the fiscal strength to do the same thing. Our plans to found more supermarkets are already facing difficulties due to a shortage of capital and complicated procedures for land and workshop acquisition.

Nguyen Anh Hoa, Executive Director of Citimart chain
 
I don’t think that there will be great confrontation in competition. I think distributors, both foreign and domestic, will share the same slice of the market. Analysts once forecast that the foreign-invested chains like Big C or Metro would kill off Vietnamese-owned supermarkets, but this has so far proven untrue. In fact, local supermarkets retail turnover has grown. Citimart, for example, had an annual growth rate of 30%.

There are rumours that we will sell Citimart, but in fact, we are planning to sublet management of sections of floor space in some of our supermarkets to Hong Kong-based Dairy Farm. This means that we can concentrate efforts on setting up other bigger supermarkets.

Nguyen Anh Hong, Executive Director of MaxiMart

It will be very difficult for locally owned supermarkets to rival foreign chains, as they have huge capital. Foreign retailers can accept losses for five to seven years before dominating the market. Vietnamese retailers simply cannot endure such costs.

However, I think that local enterprises have their own advantages. They have a deeper understanding of the local market, and they have strong local brand names. In addition, small enterprises will find it easier to shift from one kind of business into another when necessary.

Dang Thanh Hung, Head of the Public Relations Division of G7 Trading and Services Company (G7 Mart)

G7 is calling on traditional distribution channels (traditional markets, shops, variety stores) to join forces to retain their market share. G7 will spend money to change the existing traditional chains of stores into modern supermarkets.

By July 2006, G7 will have opened 500 G7 marts across the country, 500 member shops (that are yet to meet G7 mart standards), and 100 wholesale distribution centres. These figures may look pretty modest compared to the 160,000-180,000 variety stores now available in Vietnam, but they should not be underestimated.

Nguyen Sa

Source: VietnamNet