Retail businesses optimistic in face of erratic environment

Feb 17th at 08:02
17-02-2023 08:02:52+07:00

Retail businesses optimistic in face of erratic environment

The decrease in purchasing power due to the belt-tightening of consumers has seriously affected the business situation of most retail businesses. However, many businesses are still very optimistic about the market’s prospects and believe that the new strategy will help them settle down soon.

 

In a report released by Masan Group last week, The CrownX (TCX), Masan’s integrated consumer-retail platform that consolidates Masan Consumer Holdings (MCH) and WinCommerce (WCM), recorded slight top-line decline with delivering revenue of $244 million in 2022, down 3.1 per cent on-year and down 6.5 per cent so over the same period last year.

The reason, according to the report, comes from the increasingly volatile business environment due to high inflation and tight monetary policy, affecting consumer spending psychology.

Masan believes that the above difficulties may continue until the middle of 2023, but the market will still have bright spots in the second half of the year and it will focus on shopping experiences and saving costs for customers for essential products and services.

“Digitalising our entire consumer infrastructure, from product manufacturing to the end consumer, and developing an integrated MT-GT platform are Masan’s next defining innovations for 2023 and beyond. The speed and magnitude of our innovation is what give us confidence about our medium and long-term growth prospects,” chairman of Masan Group Nguyen Dang Quang said.

Masan Group is a multi-industry corporation with a revenue of more than $3.2 billion in 2022. Retail is the key driver of revenue growth and contributes more than 70 per cent to the group’s net revenues

Despite the decline, not all of Masan’s retail sector was affected. WinCommerce, the retail arm of Masan Group, which currently operates WinMart and WinMart+ supermarkets and minimarts, still saw a 6.4 per cent increase in revenue last year. This is also the only retail chain that has the same number of new stores opening as the number of stores closing in the whole market. WCM has opened 730 new mini-supermarkets, bringing the total number of WinMart supermarkets and WinMart+ stores to 132 and 3,268 respectively.

Masan Group sets a revenue target of between $3.9 billion and $4.3 billion in 2023, of which the TCX ecosystem is expected to reach a revenue of about $2.8 billion to $3.1 billion, an increase of 16-29 per cent compared to 2022.

WCM is expected to deliver net revenue within the range of $1.5 billion and $1.7 billion in 2023, up 23 per cent to 38 per cent from last year. Key drivers of this growth are continued successful new store openings and store level revenue uplift. WCM targets to open 800-1,200 stores in 2023. The company will focus on minimart and minimal models with multi-format ranging from WinMart+ urban, WIN, WinMart+ rural to consolidate urban and rural.

MCH aims to increase its revenue by 15-30 per cent. Convenience food, beverage and home personal care are expected to be key growth drivers for MCH, accounting for two-thirds of total revenue growth in 2023.

Japanese retailer AEON also has plans to accelerate the opening of new stores with strong multi-formats, and under the current context. This brand currently has about 200 stores in Vietnam, including six shopping centres and supermarkets and plans to open 16 new stores by 2025.

General director AEON Vietnam Furusawa Yasuyuki shared, “I think flexible is key in the current context. We still keep opening big shopping malls, at the same time diversifying other formats such as supermarkets, speciality stores, compact GMS for more convenience and ease to buy for customers, depending on the area and city.”

AEON said they will collaborate with domestic suppliers to produce products made in Vietnam following the standard of enterprises to contribute to stabilising the supply chain and support enhancing suppliers’ capacity.

“We will provide local customers with high-quality products made in Vietnam following AEON standards, with reasonable prices through promoting AEON Private Brand product development,” added Yasuyuki.

In addition, AEON Vietnam will focus on digitalisation through our hands-on delivery service in e-commerce, and increase benefits for customers with A-point (customer loyal point integration between all AEON businesses in Vietnam), promote cashless payment and accelerate the expansion of more stores with multi-formats to meet the customers’ shopping behaviours.

FPT Retail also hopes to expand into other industries, besides the FPT Shop chain and the FPT Long Chau pharmacy chain.

“We aim to provide all products for the increasingly diverse needs of customers, especially the retail sector with essential products such as food and consumer goods, or supermarket and education sectors,” said Nguyen Bach Diep, chairwoman and CEO of FPT Retail.

Diep said that the difficulties of the retail market may continue until the middle of the year, even the end of the year, and FPT Long Chau pharmacy chain will remain the growth driver of FPT Retail.

“FPT Long Chau will focus on expanding to bring customers more quality products at competitive prices. We plan to open 400-500 more stores in 2023. Technology will also be widely applied to the operations of both FPT Shop and FPT Long Chau chains to enhance customer experience,” declared Diep.

Many retail businesses have experienced a peak shopping season during the Lunar New Year in January that was not as expected.

According to the Vietnam Retail sector update report 2022 and 2023 outlooks from SSI Research published January 19, the retail market will continue to be gloomy until at least June 2023 due to difficulties related to the macroeconomic issues.

Rising cost of living and VAT returning to 10 per cent after a period of time reduced to 8 per cent are factors affecting people’s purchasing power. SSI predicts that consumption for non-essential products will decrease, leaving profit growth of many retail businesses negative in the first half of the year.

In fact, some pioneering retailers in the electronics and technology sectors such as Mobile World (MWG), FPT Retail, and Digiword have all recorded a decline in revenue since the fourth quarter of last year.

Revenue of MWG and DGW decreased by 15 per cent and 48 per cent respectively, FPT Retail sees better business results with positive growth, but only increased by 5 per cent over the same period last year.

MWG chairman Nguyen Duc Tai commented, “If unlucky, difficulties may last until the third quarter of 2023. The retail market is quite bleak, but each retail business with its own strategies is still optimistic to find the most valuable opportunities.”

vir



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