VinCommerce, realisation of Masan Group (MSN) “Point of Life” business strategy

VinCommerce, realisation of Masan Group (MSN) “Point of Life” business strategy

More than a year under one roof with Masan Group now, the well-conceived restructuring strategy has brought a facelift to the operations of VinCommerce, Vietnam’s leading retail platform.

Optimising the product portfolio, centring on fresh items, is one of the strategic measures helping to improve VinMart/VinMart+ operational efficiency

Despite facing the adverse impacts of COVID-19, in the fourth quarter last year VinCommerce for the first time posted VND16 billion ($695,650) in profit, with positive earnings before interest, taxes, depreciation and amortisation (EBITDA) of 0.2 per cent, signifying that this retail system has achieved its initial target of bringing VinCommerce to the breakeven point only one year after a landmark M&A deal with Vingroup, Vietnam’s top private conglomerate.

The move marks a watershed in Masan Group’s retail segment development, laying the groundwork for the company’s transformation in 2021.

Efforts to optimise product portfolio, centring on fresh items

On 8am everyday, Vu Thi Minh Ly, head of the fresh products division at VinMart Times City supermarket in Hanoi checks the wide assortment of products, from fresh meat and vegetables to breads fully covering the shelves after opening hour. Each day, Ly dedicates 90 per cent of her time to working directly at different spaces of the store, only spending 10 per cent of her time at work on paperwork.

More than a year after VinMart/VinMart+ fell into the hands of Masan, the fresh product segment at VinMart Times City has undergone remarkable changes.

“Compared to before, our fresh goods selection has been greatly diversified and comes in larger volumes, drawing very positive feedback from the customers. I check the areas under my control multiple times to ensure the products on the shelves are of the best quality. Despite greater product volumes, products must undergo strict quality control before reaching customers’ hands,” Ly said.

The stores have constantly come up with alluring sale promotion programmes targeting hundreds of daily essentials every day

Optimising the product portfolio, centring on fresh items, is one of the strategic measures helping to improve VinMart/VinMart+ operational efficiency that Masan has announced after acquiring the VinCommerce retail platform from Vingroup in late 2019. The shift has been deployed seamlessly across the VinMart and VinMart+ chains.

According to Nguyen Thi Ngoc Lan, VinMart+ regional manager, the product structure at VinMart+ has undergone notable changes with increased volumes. For instance, in the past there were about 30 kinds of products in the grocery space, mostly roots. It is now complemented with fresh vegetables and other fresh items like fish, chicken meat, and MEATDeli chilled pork. Many other quality products have been added to the store portfolio.

“Coming to VinMart+ now, customers can find almost all of their daily essentials,” said Lan.

Aside from diversifying their product portfolio with fresh items, attractive pricing programmes at VinMart/VinMart+ have also helped attract customers to the system. The VinMart/VinMart+ chains have constantly come up with alluring sale promotion programmes targeting hundreds of daily essentials every day. The discount policies are not only available during the weekend, there are also 15 day-a-month programmes.

Dual-way restructuring strategy

VinCommerce has been restructuring its operations in two directions: first, bolstering the operational efficiency of the whole system through optimising the product portfolio focusing on fresh items, aside from sale promotions or streamlining the operation model of VinMart+ with new shop arrangements.

Second, VinCommerce took drastic measures by closing supermarkets and poorly-performing convenience stores where revenue per square metre was nearly 50 per cent less than what would help them reach the break-even point. Hundreds of stores were closed last year. Simultaneously, VinCommerce has launched a raft of new stores with new arrangements in potential areas.

This strategy bore fruit, helping the leadership of Masan Group to quickly achieve VinCommerce’s breakeven goal after just one year, a goal which many initially deemed unattainable.

Fresh items are among the factors attracting customers to VinCommerce stores

After this first strategic milestone, VinCommerce’s target for 2021 is shifting from a traditional shopping venue to being an on-to-offline champion, ready to bring shoppers’ intriguing experiences.

Nguyen Dang Quang, chairman of Masan Group, calls this the “Point of Life”, signifying that the platform provides essential products and services representing more than 50 per cent of consumer spending, including fast-moving consumer goods (FMCG), fresh food, financial products and services, and value-added services. This is what Masan envisioned when breaking into the retail segment.

With the ambition to carve out a spot among the world’s top 50 retailers, Masan Group has established The CrownX by merging VinCommerce and Masan Consumer Holdings.

The merger is expected to create synergies to optimise Masan Group’s business efficiency. Accordingly, last year, The CrownX raked in a net revenue reaching VND54.277 trillion ($2.36 billion), growing into Vietnam’s second biggest retail performer.

VIR