Co-opXtra throws down a challenge to Metro

Co-opXtra throws down a challenge to Metro

Metro had been the only modern wholesaler until the day Co-opXtra, a joint venture of the Vietnamese Saigon Co-op and Singaporean NTUC FairPrice.

Saigon Co-op jumps on the bandwagon

On May 4, Saigon Co.op - NTUC FairPrice Company Ltd received the investment license and announced the establishment of the Co-opXtra hypermarket and Co-opXtra Plus brands.

The joint venture has the initial investment capital of $6 million which would increase gradually during the project implementation. Of this amount, Saigon Co-op contributes 64 percent of capital, while the Singaporean partner 36 percent.

While Co-opXtra aims to serve individual customers, Co-opXtra Plus would serve the demand from all groups of customers, from individuals and households to institutional customers, who are enterprises, schools, restaurants and hotels.

Nguyen Ngoc Hoa, Chair of Saigon Co-op, said the first Co-opXtra Plus hypermarket of the joint venture, capitalized at $9 million would be opened in mid May in Thu Duc district in HCM City.

Retailer will compete with wholesaler

Co-op Mart has been well known in Vietnam as a big retailer. However, with the establishment of Co-opXtra Plus, Saigon Co-op has decided to jump into the wholesale sector, in which Metro has been the only player for the last 10 years.

While Metro is the main competitor in the wholesale sector, Big C would be the main competitor in the retail sector for Co-opXtra.

Nguyen Thi Hanh, General Director of Saigon Co-op, the chain with more than 60 supermarkets nationwide, said that it’s now the right time to develop hypermarkets which distribute goods in large quantities.

She emphad that hypermarket has become more popular in recent years in many other countries.

In Malaysia, for example, hypermarkets and supermarkets account for 67 percent of the retail market. In Thailand, the market share being held by hypermarkets is double that of supermarkets. Meanwhile, the models which have been developed in Vietnam so far still cannot satisfy the demand.

Vietnamese consumers nowadays need to be better cared by the modern retail modes, with which consumers not only can have their demand satisfied, but also can enjoy the interesting shopping space.

As such, Saigon Co-op Group which has Saigon Co-op – a retail brand, Co-opFood – a convenience store chain which serves food, now tries to develop new hypermarket brands.

Metro Cash & Carry Vietnam, the only modern wholesaler in Vietnam until the establishment of Co-opXtra, entered the Vietnamese market in 2001. It has reportedly reported loss (it only made profit in 2010), but its turnover has been increasing steadily.

In 2011, Metro Cash & Carry Vietnam reportedly obtained the turnover of euro466 million, or VND12.5 trillion, an increase of euro50 million over 2010.

The turnover amounted to 17 percent of the distributor’s turnover in Asia and Africa, which is the second biggest in the region, just after China, and far higher than that in India and Japan.

The good business performance of the foreign distributor in Vietnam has prompted it to expand the network. Having a large network of 19 supermarkets already, but it still plans to increase the number of distribution centers to 30-35 in the next 3-5 years.

Co-opXtra Plus has also set up an ambitious business plan, intending to open 1-2 new sale points in big cities every year. The joint venture plans to have 5 Co.opXtra and Co.opXtra Plus hypermarkets by 2015 and 15 by 2020. While Metro distributes 25,000 product items over the last 11 years, Co-opXtra Plus would distribute 50,000 items.

vietnamnet