Wednesday, December 7 2016

VietNamNews

Retail faces tough competitors

Update: November, 27/2015 - 08:57

Customers check out at Fivimart in Ha Noi. The domestic retail market has seen a rapid increase in the number of mergers and acquisitions recently. — VNA/VNS Photo Ngoc Tiep

HCM CITY (VNS) — Mergers and acquisitions are churning the Vietnamese retail market, with large domestic players buying out rivals and massive investment by foreign retailers.

Giant conglomerate Vingroup acquired supermarket chain Maximark, a popular retailer in the southern and south-central regions, from An Phong Investment Corporation in October.

Nguyen Thi Anh Hong, the biggest shareholder of An Phong, told Tuoi Tre (Youth) newspaper that after two weeks of negotiations she and other shareholders decided to sell Maximark though they had spent 20 years building it up. But they had no regrets because it was the right time to sell, she said.

Vingroup will take over Maximark's nine outlets, which have all had steady business for years.

Citimart, one of the first private retail brands in Viet Nam, sold 49 per cent to Japan's Aeon Group in late 2014 and changed its name to Aeon Citimart.

Domestic retailers are also expanding by opening more outlets as they prepare for the inevitable confrontation with large foreign players.

Vingroup has been opening many VinMart and VinMart plus stores in quick succession since it entered to the retail market in 2013, and now has 125 outlets.

Co.opmart, another supermarket chain, has 360 outlets and is expected to open two more this year.

Nguyen Thanh Nhan, general director of Sai Gon Co.op, which owns Co.opmart, believes that the increase in investment in retail by domestic firms is needed to take on foreign firms and retain market share.

The competition with foreign retailers would help quickly improve the domestic retail model, he added.

Foreign firms enter

Pham Thi Ha, a resident of HCM City's Go Vap District, said she was used to buying things at traditional markets and roadside shops, but the opening of an E-mart supermarket nearby would offer her more choice.

It will be the first outlet in Viet Nam for E-mart, South Korea's largest retailer. E-mart said it has been researching the Vietnamese market since 2011 by establishing a retail joint venture. It plans to have a long-term presence in the country.

Korea's Lotte Mart has 11 outlets, the newest of which opened in the Mekong city of Can Tho in October. A company spokesperson said there would be 60 outlets by 2020.

Aeon Group is also a major foreign retailer in Viet Nam. Yasuo Nishitohge, general director of Aeon Viet Nam, said his company has invested around $220 million in the Vietnamese market so far. It plans to have 20 shopping malls in the country by 2020, raising its total investment to $1 billion.

The group would focus on a general merchandise store model in Ha Noi and HCM City before going to others cities like Da Nang and Can Tho, he added.

With the influx of foreign retailers, consumers would have greater choice in the short term, but over a longer term domestic products face the risk of losing in their home market if they are uncompetitive, analysts feared.

But the race has truly begun. — VNS



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