Vu Vinh Phu, President of the Ha Noi Supermarket Association, discusses with Hai Quan (Customs) Newspaper the competition between traditional markets and modern supermarkets in Viet Nam
What is your thought on the role of Vietnamese traditional markets as supermarkets and other modern retail franchises are gaining strength in the country?
There are two schools of thought on the role of traditional markets. One side wants to quickly establish more modern supermarkets to replace traditional markets, saying they are often lacking in organisation and have poor food safety and hygiene standards. The other side wants to preserve traditional markets for their cultural value as well as their market function to serve lower-income people.
I'm personally for the preservation of our traditional markets. Supermarkets can and will be developed but we must have the timing correct. Annual GDP for Ha Noi and HCM City is US$2,500 and $5,000 per capita, respectively. In my opinion, the figure must reach $7,000 before we can effectively develop supermarkets.
People in rural areas are not familiar with supermarkets. Traditional markets, for them, are not just a place to purchase necessities but also a place to sell their products.
Would you say traditional markets are losing in the fight against modern supermarkets right now?
I believe there are two reasons behind it. First is how traditional markets are slow to catch on to customers' demands and expectations, while supermarkets do exactly what customers want them to do such as selling goods with identifiable origins and providing receipts to customers.
Second is the change in customers' habits. People with higher incomes don't want to go to traditional markets, where organisation and cleanliness often leave much to be desired.
If traditional markets fail to adapt to the new market and the new customers, the future cannot be good for them.
As a former director of the Ha Noi Department of Commerce, what do you think should be done to improve the competitive advantage of traditional markets?
Some traditional markets have been there for a long time and removing them is out of the question since they are part of people's lives and part of their cities' culture such as Dong Xuan Market in Ha Noi and Ben Thanh Market in HCM City.
The challenge is to upgrade those traditional markets so that they meet modern-day standards but remain convenient for customers. This can be achieved by building easy-to-access parking areas and improved infrastructure and hygiene standards.
From a policymakers' point of view, upgrading traditional markets requires funding and long-term strategy. How the required capital to invest will be secured and how the development strategy will be executed are decisive factors.For example, Ha Noi plans to build 1,000 supermarkets, 42 shopping malls and 595 traditional markets by the year 2020 but it doesn't explain where the money will come from.
Could you be more specific on how well cities in Viet Nam are developing their network of supermarkets and traditional markets?
Any development plan requires a feasibility study. Cities must clearly identify what type of market will serve which demographic group, as well as the buying power each group possesses.
In Ha Noi, there is one street with three supermarkets –Fivimart, Lotte and Hapro –located a few hundred metres apart. There is obviously a big gap between planning and reality.
City authorities should also invest in improving traditional markets' infrastructure while encouraging traders to build a commercial code of conduct to gain customers' trust. — VNS