Convenient stores run for market share in HCMC

Businesses in HCMC have been rushing to open convenient stores, which now total 1,050 with the growth rate of 100 percent for the last three consecutive years according to reports by the Department of Industry and Trade.
Consumers purchase food at a convenient store in HCMC (Photo: SGGP)
Consumers purchase food at a convenient store in HCMC (Photo: SGGP)

After owning over 100 Co.op Food stores mainly selling food, foodstuff, fresh and processed food and other essential commodities; Saigon Union of Trading Cooperatives (Saigon Co.op) has launched new model Co.op Smile specializing in groceries, cosmetics, garment items and food. The union is expected to develop about 200-300 Co.op Smile stores this year.

Saigon Trading Group (Satra) now has 140 Satrafoods in HCMC and some provinces and cities. Vingroup has entered the field with 1,500 VinMart+ stores nationwide, quintuple the number at the end of 2015.

Late born brand name MWG of Mobile World Company has had nearly 100 selling spots mostly inner HCMC.

Besides domestic companies, foreign investors have also entered the Vietnamese market such as 7-Eleven that opened its first convenient store in June.

Experts say that convenient stores in HCMC are now divided into two types with one specializing in trading food and the other in fast-moving consumer goods.

Fifty percent of the current number of 1,050 convenient stores in HCMC are now selling fresh food. Domestic firms hold most stores trading fresh food while foreign investors monopolize fast moving consumer goods, beauty and health care products.

Many businesses say that one of difficulties in the convenient store field in Vietnam is that most consumers have no habit of paying high prices for convenient factors.

In addition, it has been difficult to find premises to open stores because of rent hike. The rent has doubled since 2013 to reach 60-80 million a month with short rental period while a convenient store takes 5-6 years to reclaim investment capital. A brand name which expects to have stable profit, is to have to open at least 300 stores.

Deputy director of the HCMC Department of Industry and Trade Nguyen Ngoc Hoa said that the growth rate of convenient stores is much higher than supermarkets or other retail types. The most difficulty is goods supply organization, logistics and management which foreign businesses are more experienced than Vietnamese enterprises.

According to experts, although convenient stores have been strongly developed in Vietnam, the number of consumers per store is still lower than other countries.

There is one convenient store for 69,000 consumers in Vietnam while the ratio is 37,000 per store in the Philippines, 21,000 in China, 5,556 in Thailand and 1,800 in South Korea.