Despite low purchasing power, supermarkets still expanding

Despite low purchasing power, supermarkets still expanding

The market demand has been decreasing continuously, while the retailers’ revenues have also plummeting dramatically. Nevertheless, new investors still have been going ahead with their plan to penetrate the market, while existing retailers have been trying to expand their networks.

Real estate developers also run supermarkets

Son Ha Group, a household appliance manufacturer and real estate developer, has opened its first supermarket in its chain in Ha Dong district in Hanoi, where there have been many supermarkets with well known brands such as Co-op Mart, Fivimart, Big C and Metro.

The spokesman of Son Ha Group has revealed that two more supermarkets would be opened in 2012, possibly in Cau Giay and Tu Liem districts in Hanoi. Meanwhile, the group hopes to have 20 supermarkets more in the capital city and provinces in the next five years.

The ambitious plan by Son Ha has surprised many people, who believe that it’s now not the right time to pour money into supermarket projects, when the demand decreases in the economic downturn.

However, Son Ha has every reason to jump into the retail market. It can use the existing land and infrastructure items it has acquired in the last many years as a real estate developer for retail premises.

Prior to that, FLC Group, a new rising star in the real estate sector in Hanoi, also opened FLC Mart on the first floor of FLC Landmark Tower in Tu Liem district

Success can be made only by those who grab opportunities

In June 2012, Fivimart chain, run by Nhat Nam Company, opened its 14th supermarket in Ba Dinh district in Hanoi.

Vu Thi Hau, the owner of the retail chain, said existing retailers have been trying to cement their positions on the market before foreign retailers land in Vietnam.

Hau has also said that it’s now the right time to invest in order to reap fruits in some more years. Though investors can get benefit from the real estate price decreases, it would be not easy to find the land plots in central districts that can meet the requirements to set up supermarkets.

This explains why many retailers have to leave the market, while many others have come. In Ha Dong district, three supermarkets have been set up and would be set up in an area with the radius of one kilometer, including Co-op Mart, which has been operating for the last few years, Hiway which has just made debut, and Metro, which would be inaugurated soon.

The reported figures about the business performance of retail networks have not made retailers get pessimistic. Vu Vinh Phu, Chair of the Vietnam Supermarket Association, has informed that the sales of the supermarkets in the city dropped by 10-12 percent in June because of the overly high bank loan interest rates, electricity price increases and the low demand.

However, the information has not discouraged retailers. The manager of a big distribution chain has affirmed that there is nothing to worry about. Over the last 15 years, since the day of its development, the chain has been growing steadily by 20-30 percent year on year, in both terms of revenues and the coverage of the network.

The executive also said that modern retail channels now account for only 20 percent of the total revenue of the retail industry, which means that there are still many opportunities for retailers to grab to develop.

Pham Hong Thai, an executive of a new retail chain, said that in all cases, consumers would still have demands and have money to buy goods to satisfy their demand. Therefore, the opportunities for retailers would exist in any cases.

vietnamnet