Is the home appliance market becoming saturated?
VietNamNet Bridge - The decisions by Tran Anh Digital World JSC to sell its distribution chain and the moves by giant home appliance chains to open drugstores indicates the home appliance market is becoming saturated.


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Tran Anh has been sold to The Gioi Di Dong




The Gioi Di Dong, the largest electronics and home appliance retail chain, in early 2018 announced it has wrapped up the takeover of Tran Anh, a home appliance distributor.

Just days after the announcement was made, Tran Xuan Kien, former president of Tran Anh, answered an interview to a local newspaper and said he and other shareholders of Tran Anh decided to quit the technological production distribution market after 15 years of operation because they can see the market has no future.
 
According to Kien, in overseas markets, the consumption of home appliances has reached the critical point. The strong development of e-commerce has also shrunk opportunities for growth.

Analysts say that the giants, who hold the largest home appliance market shares, have realized that opportunities in the market are no longer great. This is why The Gioi Di Dong, FPT Retail, Digiworld and Nguyen Kim have been trying new businesses.

The Vietnamese drug retail market in 2017 was estimated at $4.7 billion, while the figure may rise to $7.7 billion by 2021 and $16.1 billion by 2026 with the CAGR (compound annual growth rate) of up to 11 percent.

The Gioi Di Dong, for example, has bought Phuc An Khang, a drugstore chain, and announced the recruitment of pharmacists.

FPT Shop reportedly has taken over Long Chau drugstore chain in HCMC and Trung Son in Can Tho City. Meanwhile, Digiworld and Nguyen Kim both are also preparing to jump on the bandwagon.

The home appliance distributors have every reason to eye the drug distribution market. 

According to IBM, an analysis firm, the Vietnamese drug retail market in 2017 was estimated at $4.7 billion, while the figure may rise to $7.7 billion by 2021 and $16.1 billion by 2026 with the CAGR (compound annual growth rate) of up to 11 percent.

A report shows that the Vietnamese spending on drug has increased from $9.85 in 2005 to $22.25 in 2010 and to $37.97. In 2017, every Vietnamese spent $56 on drugs. 

As such, it is highly possible that the major driving force for home appliance distributors’ growth in the next years will be drugs, not their major business field.

Some home appliance centers are reportedly meeting difficulties because of higher costs and lower profits. Tran Anh’s Q2 report (the fiscal year begins on April 1, 2017) showed a post-tax loss of VND7.4 billion.

Opening too many supermarkets was one of the reasons behind the loss. Sources said some large distributors have no more capital for marketing. However, distributors have to enlarge their networks to scramble for clients.


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