The bustling market

The prediction that a series of big distribution groups would land in Vietnam cannot raise any worries any more. Some foreign distributors are really eyeing Vietnam, but most of them are the Asian names, and not big. The more worrying thing for domestic retailers is the rapid expansion of existing foreign distributors, who have been successful in Vietnam.

Most recently, South Korean E-Mart Group has announced the establishment of a joint venture in Vietnam, planning to set up 52 sales points nationwide. Meanwhile, in 2010 alone, Big C opened five more supermarkets, raising its total number of distribution points to 14. The number is expected to rise to 29 by 2013.

Metro has repeated many times that its distribution network will not only have 13 sales points as presently. Lotte, after two years of operating in Vietnam has had two big supermarkets, while it is now seeking more business premises to fulfill the plan to have 30 supermarkets by 2018. Opinions from well informed circle say Family Mart is preparing to land in Vietnam.

However, domestic distributors have also made a big leap recently. The Hanoi Trade Corporation (Hapro) has had a network of 50 supermarkets and 700 convenience stores. Besides, Hapro is developing a modern market system in northern provinces by upgrading and modernizing the traditional markets, the wholesale centers associated with production and processing areas.

Saigon Co-op reportedly got the revenue up by 39.7 percent over 2009 and the profits up by 32.7 percent. The distribution chain has had 50 supermarkets to date and remains the leading retailer in Vietnam. It plans to open at least 10 supermarkets and 30 food stores more in 2011.

Other supermarket chains including Fivimart and Citimart both have reported impressive growth rates.

Meanwhile, some domestic retailers have teamed up with foreign enterprises to set up joint ventures. G7Mart has joined forces with Ministop, Phu Thai with Japanese partner to seek profit on the Vietnamese market.

The figures show that domestic enterprises have been growing strongly, while the Vietnamese market is not a “fallow land” which could be swallowed easily as initially worried.

The market large enough for all

Analysts have pointed out that the common characteristic of domestic successful distributors is the small and medium scale and profuse goods supply. The distributors, including Hapro, Saigon Co-op, Phu Thai and Vinatex Mart, have increased their presence in many areas through convenience stores.

Right when starting its business, Hapro stated that it would focus on developing small supermarkets and convenience stores to be located at residential quarters. Most recently, the distributor has kicked off Hapro Food specializing in providing food products, which is also following the policy.

Phan The Rue, Chair of the Vietnam Retailers’ Association, also said that the model of small supermarkets, convenience store chains have helped domestic enterprises gain initial results. However, he also thinks that domestic enterprises should target rural markets which consume 70 percent of the total goods.

According to Dinh Thi My Loan, Secretary General of the Vietnam Retailers’ Association, supermarkets would see their highest peak in development in 2011 and 2012, before the development would slow down in big urban areas. Small supermarkets would become more popular

Statistics show that the purchases through modern distribution chains and convenience stores in Vietnam just account for 18 percent of the distributed goods. The proportion is also low in the two big cities of Hanoi and HCM City. Vietnam strives to raise the figure to 35-40 percent by 2020, which means a lot of opportunities for both domestic and foreign investors.

Source: VietnamNet.