Convenience stores battle for market share
VietNamNet Bridge - Retailers have been warned that they cannot expect to take back investment capital in convenience stores soon as the competition is fierce and the number of stores is still on the rise.


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Convenience stores battle for market share




GS25 from South Korea, which holds 30 percent of the retail market in that country, has announced it will set foot in Vietnam by the end of the year and open the first store in HCMC and 2,500 stores in the next 10 years.

7-Eleven from Japan, which arrived in Vietnam in mid-July, has opened seven stores so far. If things go smoothly, the chain will open an additional 100 stores in the next three years and a total of 1,000 within 10 years.

The market recently received a ‘breath of fresh air’ when Toromart, the first unmanned convenience store, was opened in downtown HCMC. The payment will be implemented with QR code technology.

Retailers have been warned that they cannot expect to take back investment capital in convenience stores soon as the competition is fierce and the number of stores is still on the rise.

According to Nguyen Xuan Quang, the manager, Toromart will be expanded in HCMC first before it reaches to Vinh City. It is expected that 200 Toromarts will be opened by the end of 2018.

FamilyMart (Japan), Ministop belonging to Aeon, Circle K (the US), Shop & Go (Singapore) have been expanding their networks. Circle K has 250 shops, while Shop & Go has 108.

Vietnamese retailers have also geared up to expand their chains. After two years, Vinmart+ has 900 sale points nationwide and the figure is expected to be 1,500 by the end of this year.

Meanwhile, Saigon Co-op, the largest retail chain in Vietnam, has 181 Co-op Food and 71 Co-opSmile stores (the new model of convenience store). It plans to open 10 more stores of each chain by the end of the year.

Analysts say that very few chains report profit. While retailers say convenience stores are less competitive than traditional markets and supermarkets because there are fewer goods and the selling prices are higher, they are still opening more stores. 

A senior executive of FamilyMart said it requires long term capital to develop convenience stores. In China, investors make a profit after 17 years, while retailers in Thailand and South Korea have to wait eight years. 

However, Vietnam is believed to be an attractive destination with an investment rate lower than in other South East Asian countries. FamilyMart hopes it will make a profit from 2019.

A report of A.T. Kearney released in 2016 showed that Vietnam ranked sixth in the world in GRDI, a five-grade promotion compared with 2015. The report also showed that convenience stores and mini supermarkets are in ‘hot development’.


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Chi Mai

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