19 April 2018 Authored byConsultancy.asia
As the Vietnamese economy continues its upward momentum, punctuated by a growing middle class and increasing urbanisation, the strategy and management firm McKinsey & Company has asked the question: what is the recipe for profitable growth in Vietnam’s grocery market?
While the Asian region bounds toward global economic dominance as a whole, there remain distinct differences in the nature of the its varying economies, even within Southeast Asia alone. The emerging ASEAN economies are growing at a rate of up to three times faster than their comparatively advanced regional neighbours, with Vietnam, currently tracking at above 6 percent annual growth in real GDP (compared to Singapore’s ~2%), among them.
A common feature of these emerging economies is the combination of a growing middle-class with greater discretionary income and more discerning tastes, increasing urbanisation, shrinking households, and a relatively time-poor citizenry with less flexible schedules and a need for convenience. Vietnam is no different, and while traditional grocers still dominate locally, the shifting lifestyles and consumer demographics indicate that the country’s immature supermarket sector is primed for explosion.
Further fuelling the prospect for rapid growth is the country’s relatively low modern-trade grocery-spend per capita, just a little above Laos and Bhutan and currently lagging Indonesia and the Philippines. Yet, according to a recent McKinsey & Company analysis on the state of Vietnam’s grocery sector, once certain GPD per capita levels are reached, the average spend on modern groceries typically sky-rockets – such that advanced economies like those of Japan and Hong Kong record vastly greater rates of modern grocery shopping with only the small incremental gains in GDP per capita past the tipping point.Grocery spending in Asia per capita
With such conditions in place, the consulting firm predicts that the modern trade market in the country will grow at a rate faster than its per capita GDP, noting that the overall grocery market has already been growing at 15 percent annually since 2012 – with the expectation that the double-digit growth figures are due to continue. As it stands, the supermarket segment still commands the lion’s share of the modern sector, but the hypermarket and convenience segments are growing at a rapid clip, recording a CAGR of 22% and 49% respectively in the five years to 2017.
But while the demand for modern groceries may well be about to boom, the question remains – how can the big retailers capitalise, especially in a crowded market and with further respect to the unique market challenges of Vietnam, such as rising real estate costs, a still persisting culture of open street-markets, and a fragmented and shifting supplier base. Additionally, the report argues, the rise in disposable incomes will likely be fastest among young urbanites who eschew car ownership, such that the old US and European growth models will not readily apply.Supermarket and hypermarket growth in Vietnam
To date, the report points to a crowded local supermarket landscape marked by low productivity and thus overall profitability. The average industry sales per square metre generated in Vietnam stands at roughly $2,500. As a contrast, the sector in Singapore generates over $8,500 according to the same metric, while in the more economically comparable Philippines the sales-rate is pushing close to $4,000 per square metre.
The present focus on expansion in Vietnam along with the scramble for market-share has contributed to this relative lack of profitability. The report notes that, “Both outside-in interviews and in-market observations point to low gross margins, driven by the necessity to compete against wet markets, intense competition between players on promotions, and supply challenges for fresh items.” The big players have already ceded 15% of the total market share in just the past five years, and the competition doesn’t look to be slowing, with aggressive new challengers recently joining the fray.Sales productivity of Asian supermarkets
So what’s the remedy – or, rather, recipe – for profitable market growth? McKinsey cites three prevalent strategies to date – the dominant low-price model, the focus on upmarket premium space, and a recent ‘winner take all’ expansion approach – and offers its own take on the keys to success and need for distinctive performance in six specific spheres;
A clear value proposition that works economically – i.e. not attempting to excel in every dimension such as price, assortment, and service; rigorous productivity management to maintain profitable gross margins – which will require consistent pricing and value proposition and ongoing discipline; championing quality where it matters most, as a point of difference to wet markets; the careful management of footprint and expansion to avoid a downward spiral and an investment in data analytics to gain a competitive edge, and, finally; to prepare for the more intense competition and market disruption still to come.
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Supermarkets are the future for fish retailing in Vietnam
By
Mike Urch
May 17, 2016
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Supermarkets are thriving in Vietnam and this will have a major impact on retail sales of fish in this fast growing Southeast Asian country.
The trend is being driven by younger Vietnamese, who prefer supermarkets to traditional wet fish markets, as they prefer the convenience and modernity of supermarket shopping.
“They do not have their parents’ expertise in being able to choose good quality fish in traditional open air markets,” said a fisheries specialist. “They prefer to shop in supermarkets where the fish has already been selected. They also prefer the cleanliness of supermarkets where there is good hygiene.”
Freshwater fish are very popular in supermarkets in Vietnam. Tilapia is sold all over the country, and customers can also find local freshwater species such as eels, carp and elephant ear fish (elephant ear fish are gouramis from the Osphronemidae family), though pangaius, another farmed freshwater species, is not often offered for sale north of Ho Chi Minh City.
Shrimp are very popular, as are tuna, and farmed Atlantic salmon is also sometimes offered for sale. This is said to be imported from China and boxes marked Lerøy have been seen. (Lerøy Seafood, which claims to be the world’s second-largest producer of farmed Atlantic salmon, has a sales office in China.)
Vietnamese supermarkets are usually situated in shopping malls where clothes and other consumer goods are also on sale. There is often a food court where people can buy meals, often to eat at their places of work.
A cinema may be part of the complex and families will visit the mall for a treat or day out. They can have a meal and see a movie, in addition to doing their shopping.
Supermarkets are also appealing because they appear “foreign.” Which they often are – at least foreign-owned. Since the domestic market was opened up in 2015, what has been described as a spate of foreign retailers has entered Vietnam.
“Vietnam’s retail market is still in its infancy,” said Bloomberg Intelligence analyst Thomas Jastrzab, in The Saigon Times. “This makes it attractive to retailers looking for fast growth potential.”
“The retail market is booming here,” said Ralf Matthaes, managing director of consultancy Infocus Mekong Research in Ho Chi Minh City, in the same local press article. “You’ve got a young population. They like to go shopping. They like the convenience of it all and they can afford mid-level range products now.”
Vingroup Joint Stock Co., Vietnam’s biggest listed property developer, planned last year for its Vinmart unit to open 100 supermarkets and 1,000 convenience stores by 2017, according to Vietnam News.
Lotte Group said last year that it plans to open 60 supermarkets in Vietnam by 2020. The South Korean retail giant also runs Lotteria fast-food chains, shopping malls, hotels and cinemas in the country.
Thai companies are also getting involved. At the end of last month, Casino Guichard-Perrachon SA, which owns the Casino supermarket chain, agreed to sell Vietnam’s Big C grocery chain to Central Group of Thailand at an enterprise value of EUR 1 billion (USD 1.14 billion).
The French retailer is selling assets in Asia and Latin America to cut debt, while focusing on price and convenience in its home market as it competes for growth amid weak consumer spending.
Central Group is one of the main family-owned conglomerates in Thailand, with interests in real estate, department stores, retailing, hospitality and restaurants.
The boom in foreign investment, coupled with rising retail sales, is helping the Vietnamese economy to expand. Achieving the government’s growth forecast of about 6.7 percent this year would make the Southeast Asian nation one of the fastest-growing markets in the world.
Vietnam has a population of 90 million people who are becoming more affluent, so it is not difficult to see why foreign companies are flocking to invest in its burgeoning retail sector. However, Matthaes said the Vietnamese retail sector is a crowded field and many supermarkets and convenience stores are not profitable.
mike.urch@yahoo.co.uk
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Big C Vietnam sold to Thailand, Vietnamese retailers in danger
Last update: 18:00 | 04/05/2016
VietNamNet Bridge - "Fifty percent of the retail market in Vietnam has fallen into the hands of Thais, and the domestic retail market is already 'dead to the shoulder,'" said Vu Vinh Phu, Chairman of the Hanoi Supermarket Association.
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The race to own Big C Vietnam chain has finally come to an end after almost half a year, with the victory belonging to the Central Group, a Thai group, with the value of $1.4 billion, higher than the predicted number of $800 million.
Big C Vietnam's new owner - Central Group – is not a stranger. Previously, the group marked its presence in Vietnam through the acquisition of 49% stake in the electronic supermarket chain of Nguyen Kim.
Thus, both large retail chains of Metro Cash & Carry and Big C Vietnam have been sold to Thai groups. And after the Big C Vietnam deal, up to 50% of the Vietnam's retail market is now in the hands of the Thais.
"Big C is like a pretty girl, who is sold to the one offering the highest price,” said Vu Vinh Phu - Chairman of the Hanoi Supermarket Association. “The end of the deal means the balance of Vietnam's retail market has been leaning heavily toward foreign companies, mainly Thai firms."
The Chairman of the Hanoi Supermarket Association said that Thai firms will produce goods in Thailand and transport it to Vietnam. Thai products are going to be on the shelves of 43 stores and 30 shopping centers of Big C Vietnam.
"I have said many times that when the Thais occupy 50% of the market share, both Vietnamese producers and consumers will become hired workers," Phu said.
Phu warned, "the risk of death" is at the shoulder because the market share is narrowing for domestic products. To sell their products at supermarkets, Vietnamese suppliers have to satisfy a lot of conditions and have to pay high discount.
VCA questions Thai company's acquisition of Metro supermarket
The Vietnam Competition Authority (VCA) has asked for details of the Metro supermarket acquisition by a Thai company in accordance with Vietnam's established laws on competition, reported Vietnam News.
According to Tuoi Tre newspaper, VCA's Deputy Director Dang Phuong Nam recently signed a document to request Mega Market Vietnam which operated the Metro supermarket chains to explain the acquisition process.
Mega Market Vietnam was the new name of Metro Cash & Carry Vietnam after the acquisition of Thailand-based TCC Holding Company into the supermarket chain. In January, Metro said TCC Land International Pte, Ltd, a subsidiary of TCC Holding Company Ltd, has acquired its complete operations in Viet Nam for €655 million (US$706 million).
The VCA, in the document, said that the request came following a proposal from the HCM City Union of Business Association that legal compliance of foreign-invested retail firms needs to be checked to ensure healthy competition.
Metro must report the details before May 30.
According to the VCA, Metro has changed its business registration certificate for the ninth time on January 25 to become Mega Market Vietnam.
The VCA said that the company was founded and operated in Viet Nam so it must comply with the country's established laws on competition.
Mega Market Vietnam now operates 19 wholesale supermarkets throughout the country.
VNS
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Co.opmart (라고도 협동 마트, Coopmart, Coopmart 시스템)는이다 슈퍼마켓 의 소매 베트남 협동 전시회 호치민시의 연합 (사이공 협동 조합에서 ). Co.opmart이 (5 월 08/2018 현재) 현재 국가 정부에서 98 개 슈퍼마켓 베트남의 많은 슈퍼마켓이다
협동 조합
설립 1996 년 본사 호치민시 , 베트남Vietnam.svg의 국기
직원 수21,000
호치민시 35 개 슈퍼마켓
북쪽 6 개 슈퍼마켓
중앙 16 슈퍼마켓
Tay Nguyen 6 슈퍼마켓
사우스 이스트 12 슈퍼마켓
사우스 웨스트 23 슈퍼마켓