Parkson’s demise and the rise of competitors
Parkson’s demise and the rise of competitors
Parkson’s demise in Vietnam marks an important transition in the retail sector due to changing shopping behaviours and the rise of shopping malls invested by competitors like Lotte, AEON Mall, and Vincom.
Parkson’s sunset
Savich Aniyah, a 51-year-old businessman from Malaysia, expressed grief after the close of a series of Parkson’s stores in Vietnam, particularly Parkson Flemington.
According to Savich Aniyah, living far from his hometown, he felt consoled by seeing projects invested by his countrymen, including Berjaya's large-scale real estate projects or Parkson's shopping centres.
“I am proud of seeing shopping centres with the Parkson logo. My family often goes shopping in these places. Parkson was used to be a heavyweight in the retail sector, however, times change and the new large-scale retailers brought new shopping behaviours. These new contenders spelled the end of Parkson’s splendor, forcing it to either adapt to the new shopping behaviours or leave and make room for others," he said.
Along with Aniyah, Le Canh Bich Hanh, managing director of women’s fashion chain Vascara, will hold fond memories of Parkson. Four or five years ago, Parkson was the number one choice when Vascara expanded its operations, and Vascara’s products were present on the shelves at almost all of Parkson’s shopping centres.
The reason why Parkson started closing its stores is that its out-dated business model cannot compete on the market anymore. Notably, Parkson’s loyalty to the department store model made it inferior to shopping malls which cater to a larger variety of demands, including shopping, supermarkets, cinema, amusement areas for kids, and food courts.
Besides, Parkson suffered greatly after the expenses for upgrading the store system and rental prices increased, while it had to share the market with an increasing number of heavyweight competitors.
The representative of Thuy Duong Trading and Real Estate One Member Company Limited, the investor of Parkson Flemingtion, stated that the closing of Parkson Flemington will not impact the operation of Parkson’s remaining stores. However, the bleak business results as well as the pressure from competitors spell doom for the remaining stores.
The throne of shopping mall and complex centre model
Parkson’s demise in Vietnam shows that the retail sector is moving away from the department store model to the shopping mall and shopping complex models, reacting to changing shopping behaviours.
The first change is that shopping centres focus on trading high-end fashion products, instead of a mix between high-end and affordable products. Numerous shopping centres survive from rent paid by luxury brands like Gucci, Chanel, Versace, D&G, Burberry, Hermès, Dior, and Louis Vuitton, among others.
The second is the transition from the department store model to the shopping mall model, as signified by the appearance of Lotte, AEON Mall, Saigon Centre Takashimaya Mall, and Vincom.
Department stores range about 20,000 square metres, mainly focusing on comestics and fashion items. This model’s relatively small area makes it difficult to optimise benefits and accommodate areas for restaurants or amusement areas for kids.
Meanwhile, with the average area of 45,000-60,000sq.m, each shopping mall or shopping complex was built to offer a one-stop shopping experience, including areas for shopping, restaurants, spa, supermarket, and banks. These shopping malls not only become leading destinations for shopaholics, but also meet all demands of families, from children to adults.
There is another opinion that the fast increase in quantity of Vincom, a domestic shopping centre brand, is the major reason behind Parkson’s leaving.
At present, Vincom is considered the uncontested champion of the Vietnamese retail market, with the largest retail area for lease in the country, offered through 46 shopping complexes in 22 cities and provinces. The figure is expected to increase to 50 this year. Vincom became the favourite destination of both international and domestic fashion brands.
Besides, AEON Mall is accelerating the preparation to build its second shopping mall in Hanoi, this time in Hadong district, as well as other malls in Haiphong and Ho Chi Minh City.
Furthermore, Lotte also plans to expand operations in Vietnam.
