Vietnam Retail Market, 2012

Vietnam Retail Market
By Dunglt
Year 2012
Note: Confidential

Menu
Country

 Vietnam factsheet.
Industry

 Vietnam retail market.
Retailers
 Key points to drive retail
competition.
End-user

 Who are players???

Vietnam Factsheet
 GDP Index.

 Population index.

 Macro economy.

These factors will create market trends and affect to
sophisticated demand of customers, models or investment of
retail owners.

Vietnam Factsheet
GDP (%)
10

9 8.5 8.5
8.2
8 7.7
7.2
6.8
7
6 6.2
5.9
6 5.5 5.3
4.8 4.7
5

4

3

2

1

0
Y1999 Y2000 Y2001 Y2002 Y2003 Y2004 Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011

GDP growth YoY shows down trend from Y2010 and
beginning of Y2012 has some signals of deflation but still in
the emerging growing countries.

Vietnam Factsheet
Aver Income
45000

40,070
40000
Average
35000 income, Vietnam still
31,800
lags behind others in
30000
ASEAN but from 2011
25000 Vietnam stand out of
poor countries. As
20000
Y2010 TNS South Asia
15000 forecast, around
2015 Vietnam can
10000 7,760
have chance to
5000
2,060 2,500
4,150
surpass Indonesia
1,040 1,160
0
750
and Philippin.

Vietnam Factsheet

Monthly Household Income
100% 1%
3%
90% 9%

33%
80%
21%
Upper middle class in Urban
70%
<2.0M VND
Vietnam now constitutes
60%
65% of pop But only makes
<3M VND
up about 30% of total
29% <4.5M VND
50% population.
<6.5M VND
46% Source: TNS VietCycle 2011 –
40% <13.5M VND
Hanoi, HCMC, Danang Can
30%
<15M VND Tho only
21%
15M+ VND
20%
10% 9%
10%
5% 10%
0% 3%
Y1999 Y2011

Vietnam Factsheet
Vietnam just start urbanization time

Vietnam Factsheet
Two thirds of Vietnam’s population is still eking out a day to day existence, while 5% are as
affluent as the western world
As far as luxury goods and services, the market is still estimated to be small roughly 4%-15% of
urban households, the equivalent 1 million to 4 million consumers or 800,000 – 200,000 households
Almost four of every 5 rural consumers still are BOP, thus placing VN wealth into perspective

Urban& Rural Gr

Vietnam1.50% 5.60%
3.90% 11.00% 15.00% 29.00% 34.00%

15M+ VND
<15M VND
<13.5M VND
Rural 1.00%6.90%
0.60%
1.60% 12.00% 31.90% 46.00%
<6.5M VND
<4.5M VND
<3M VND
<2.0M VND
Urban 3.70% 10.80% 13.50% 21.60% 22.20% 21.40% 6.80%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Wealthy Affluent Middle BOP

Vietnam Factsheet
2nd youngest population in Asia
Vietnam’s consumption days are still ahead - 57% under 25
(Source: GeoHive)

Vietnam Factsheet
3rd largest female working population in Asia
Female consumers will become more and more important in
shopping consumption (Source: ADB)

Vietnam Factsheet
Smallest urban population in Asia
Vietnam shall experience an urbanization explosion like China
Source: Country Statistics Offices

Vietnam Factsheet
Sources: Main 2010 vs 2011 vs
indicators 2010 and
Q1 2011, GSO
2009 2010

GDP Growth YoY +6.8% +5.9%

Lending Rate
16-17% 22- 25%

Inflation (Average
YoY) 9.2% 18.6%

USD/VND (Official 19,500 21,036
Dec 31st)

Implemented FDI 11 11
(Bil USD)

Vietnam Factsheet
About two-thirds of the leaders feel business conditions in
Vietnam have deteriorated
Source: AC Niensel

Business Conditions in Vietnam (Now vs. Year Ago)
100% 2% 2% 3%
9% 9%
90% 12%

80%
30%
70%
38% 61%
57% Deteriorated Significantly
60%
Deteriorated Somewhat
50%
Remained the same
40%
Improved Somewhat
30% 54% Improved Significantly
40%
19%
20% 30%

10% 14%
6%
0%
1st Half 2010 2nd Half 2010 1st Half 2011 2nd Half 2011

Vietnam Factsheet
Global economic crisis shows up in the top 05 concerns for the very first
time. Inflation is still a top burning concern of businesses, Source: Ac
Niensel

Vietnam Factsheet
Consumer Confidence has also been dented in 2011, though
showing some positive upswings in Q4, but normally Q4 is big
shopping season so maybe after that will be deeply down trend

Vietnam Factsheet
Premium segment increase while value decrease over
time, indicating trading up trend from consumers in some categories

Vietnam Factsheet
Conclusion

Short term concerns: Macro economy Long term concerns: even facing short
shows some issues that Vietnam have term troubles from general economy
to face during 2011-2013: however Vietnam still show potential
1. GDP growth decreases and even strength come from:
deflation signal in the beginning of 1. Big demand of 90 million
2012. population.
2. High inflation nearly 20% affect to 2. Young country and young
saving pocket of consumers. demand, young trends.
3. High input cost caused by 3. Female contribute big
increasing gas, petro and consumption in the near future.
electronic price… 4. Growth in income and broaden
4. Decreasing foreign investment. mid and high income household.
5. Unstable of exchange rate go up 5. Urban and rural growth more than
price of import goods. 100%
6. High bank interest rate raise bank 6. High-end segment still increase
expenditure. despite bad economy.

 Vietnam Retail Index.

 Vietnam Retail Volume.

 Vietnam Retail Key Trends

 Key points to drive retail competition.

As A.T.Kearny report Vietnam
stand at 23 in the most attractive
retail market in Y2011 and slip 9
points from Y2010 due to low
growth GDP and unstably of
economy policies.
1. 2008: No 2.
2. 2009: No 6.
3. 2010: No 14.
4. 2011: No 23.


Vietnam at Peaking area of
Cycle.
During 2011, retailing
continued to experience
faster expansion as consumers
had more sophisticated
demands and lifestyles. Higher
living standards and rising
disposable income allowed
consumers to have additional
budgets for products to
improve their quality of life.
Clothes, electronics and home
appliances, and jewellery
were some of the products
that gained much attention
from consumers in the review
period.

Vietnam is potential market with high score but quite risks come from the
government policy and economy.

Luxury Retail – With regard to Gucci and Louis Vuitton, Lacoste already have big
stores in 2 big cities in Vietnam: Hanoi and HCM.
Zara and H&M will coming soon to Vietnam.

Compare with retail big cities in area, Vietnam’s still far behind of them (retail
sqm/ person) and that is potential market Vietnam should explore.

MT appears to be growing during the recession in
terms of dollar value spent per outlet type and has
been for some time.
During the review period, modern retail
channels continued to emerge despite
Model of Channels the dominance of traditional channels.
Consumers became more used to
100%
4.8% 4.7% 4.4% shopping at modern grocery channels
90% such as supermarkets, hypermarkets and
17.0% 18.0% 18.7% convenience stores thanks to their
80%
pleasant environment as well as their
70% diversified product portfolios. In
14.0% 13.3% 12.3%
addition, modern grocery channels tried
60% Others their best efforts to offer consumers fresh
61.5% 61.5% 62.3%
Specialty food and to lower their prices to
50%
Morden Trade compete with traditional channels.
40% Market
Consumers also preferred to come to
modern nongrocery stores such as
30% Grocery Store
clothes and beauty specialists, rather
than traditional stores located in the wet
20%
markets, because they could freely look
10% or try on products that they wanted.

0%
Y2007 Y2008 Y2009 Source: TNS

Supermarkets are dominating Modern Trade

Monthly MT Shopping

2%
8%

11%
Mini market
Hyper market
50% Cash & Carry
Supermarket
Have not shopped
29%

Source: TNS

Foreign Direct Investment in Retail

1. Foreign companies can invest in Vietnam by many ways, such as establishing
subsidiaries, joint ventures with local companies or 100% foreign invested companies.
Specifically for the retailing industry, the law used to limit the amount of capital foreign
partners could contribute in the local business to 49%. From 1 January 2008, the law
was lifted and companies could have bigger capital contributions, yet they still
needed partnerships with local players. From 1 January 2009, the new law allowed
foreign companies in the retailing industry to establish 100% foreign invested
companies in Vietnam. This implementation aimed to make it easier for foreign
companies to enter Vietnam, which was in line with the agreement made by the
government when the country joined the World Trade Organisation (WTO) in 2007.
Nevertheless, the entrance of multinational companies in 2009 and 2010 was not very
dynamic due to various reasons, such as the global economic crisis, complicated
administration procedures and underdeveloped infrastructure

2. The government has improved infrastructure as rapidly as possible to support domestic
and foreign retailers. Although the market is open and international retailers are
welcomed, the companies also face strict supervision regarding currency transactions
and 25% income tax on profits.

3. In the review period, the government put its effort and resources to improve its services
such as shortening the time of its document process, but the document process
remains complicated and time consuming in the opinion of both local and
international retailers

Informal retail
1. Informal retailing only accounts for a small part of the total market. Informal retailers are typically in the
form of street vendors or websites. Street vendors can be found easily throughout the country, from
urban to rural areas, and they form a part of Vietnamese culture. On the other hand, websites, which
were mostly consumer-to-consumer, mushroomed over less than five years during the review period
thanks to the rapid development of internet service and the modernization of the urban population in
the country

2. Due to its un-organised and fragmented nature, informal retailing is usually operated by individuals. A
wide range of products can be found from informal retailing, such as fresh produce from neighbouring
countries like China, Cambodia and Thailand, to hand-carried luxury items from Europe and the US. The
quality of these products is usually unguaranteed, and their prices are also not fixed, and subject to the
negotiation and bargaining between sellers and buyers

3. Whilst the traditional channel of street vendors was stagnant, websites saw rapid development over the
review period. Many consumer-to-consumer websites were set up, which led to the entrance of eBay in
Vietnam in 2008. However, because the consumer finance market in the country was still
underdeveloped, and many consumers were still worried about the internet security system of these
websites, most of the activities online were limited to advertising and product ordering

4. By 2010, Vietnam’s law on intellectual property protection was still in draft despite the fact it had taken
a long time to develop. Thus, informal retailing still faced not much of a threat. Moreover, the
government has been known to be not very strict in terms of enforcing regulations when it comes to
controlling these informal channels. Thus, consumers still had to find ways to protect themselves from
potential issues when they purchased from these channels, such as counterfeit products, low-quality
products or cheating

Retail Landcape
1. Location is regarded as one of the most significant factors for retailers. A good
location brings higher possibility of success for most retailers, including grocery and
non-grocery retailing. The ideal locations are located at the central areas of big cities
such as Ho Chi Minh City, Ha Noi and Da Nang. These places typically have high
traffic and good infrastructure. Constantly rising leasing and rental fees in the review
period made choosing a good location a difficulty for many new retailers

2. Growth of rental fees in the big cities is expected to slow down in the forecast
period, thanks to the rapid development of new shopping centres in 2009-2010. In
addition, many retailers are finding new opportunities in suburban and rural areas to
avoid the high rental fees in the major cities, and also because the majority of the
market lives in these places

3. Retailers of luxury brands are usually located in new and modern shopping centres or
department stores. Some notable shopping places for luxury brands are The Opera
Business Centre, Luxury Mall, Vincom and Saigon Paragon. They are well-known
shopping centres where consumers and tourists can enjoy shopping for many
international luxurious brands of clothing, cosmetics or jewellery

4. As traditional retailers still contribute a major portion of the Vietnam retailing
industry, shopping malls did not any major effects on these retailers over the review
period. Moreover, as the target markets of the shopping malls and traditional retailers
are very distinct, these channels are not directly competing with each other


A Positive Outlook Is on the
Horizon
The retailing industry will experience a better
outlook over the forecast period compared to the
review period. This is owing to the continuous
urbanization as well as rising consumer living
standards. Moreover, given the intense
competitive environment, retailers will exploit
marketing and public relations activities to
generate growth as well as to strengthen their
brand image. Modern grocery retailing channels
are likely to enjoy the most robust growth in the
forecast period.

Vietnam Retail Market Index
1. Retailing employment is increasing
2. Income for sales person is quite low
3. Not easy to find skilled employees

Sale volume of retail Y2010: 500K Billion VND equal to 24B USD while Store-based Retailing
contribute 99% of total market.
Retail sale growth is 9.7% YoY while Non- Store Retailing has big growth 35.8% CAGR.

Store
base Vietnam Retail Market Index
Grocery sale reach 228KB VND (nearly $11B), contribute 45% of total SBR.
Non Grocery sale reach 271KB VND (nearly $13B), contribute 55% and grow with two digits
12.9% CAGR from 2005 to 2010, leading growth of SBR.

Vietnam Retail
Market Index

In 2010 CE&
Applicance 23KB
VND over 1B USD
and grow YoY
14%, rank 3rd in
CAGR.
CE also contribute
8.5% of total Non-
Grocery retail
volume.


Mobile
World, Nguyen
Kim, Best Caring
and FPT shop are
the retail names
that mentioned in
report while Mobile
World and Nguyen
Kim had sale
volume even bigger
than shopping
malls’ as Parkson
and Diamond Plaza.

Non
Store Vietnam Retail Market Index
Non-store contribute big growth of retail market and all focus
much into Direct Selling with turnover around 3.3KB VND (142M
USD) and increase YoY 36%. Internet Retailing is still hidden
number.

All of direct selling belong to foreign companies with cosmetic or
healthy, nutritious foods and account for nearly 50% of this market.

Forecast
Retail market is estimated slow growth from 2010 to 2015
around 1.8% YoY and expected reach $26B in 2014 from $24B
2010 while Non Store show potential growth.

While Grocery market down and minus growth, Non Grocery still
increase 3.6% YoY and help all market get more $2B covering dropt
numer of Grocery during forecast time

Vietnam Retail
Market Index

During forecast
period, CE&
Appliance has the
biggest growth
YoY with 7.8% of
Non Grocery
market, It
contribute more
than 10% of over
all with more than
$1.5B sale volume
in 2015.

Non-store still keep quick growth during forecast time with
18.1% YoY and double in 2016 with nearly $362M while Direct
Selling dominates this market.

Cash&
Carry

1. Cash-and-carry still does not play an important role in the retail industry. At the end of the review
period, there was only one player operating in this environment – Metro Cash & Carry by Metro AG

2. Cash-and-carry outlets offer diversified product portfolios, and target mostly small retailers or
companies. The key purchasers in cash-and-carry are companies, restaurants and hotels, which
usually purchase in large quantities. The core concept of cash-and-carry is wholesaling.
Consequently, individual consumers are not encouraged in this channel

3. In 2010, cash-and-carry faced strong competition from other grocery channels such as
supermarkets and hypermarkets. Earlier, Metro was considered the only place that could offer
consumers a wide range of products at the cheapest price in a pleasant atmosphere. However, in
the review period, players such as Big C and Co.opMart constantly tried to reduce their prices and
enhance their shopping environment, which made them more directly competitive with Metro. As
a result, although cash-and-carry still achieved growth over the review period, its performance was
not as significant as other channels such as supermarkets and hypermarkets

4. By the end of 2010, there were 12 outlets of Metro Cash & Carry in Vietnam, located mostly in big
cities and provinces, such as Ho Chi Minh City, Ha Noi, Can Tho, Hai Phong, Da Nang and Binh
Duong. The company is expected to continue increasing its number of outlets over the forecast
period

5. In the cash-and-carry environment in 2010, Metro Cash & Carry still enjoyed its monopoly position.
Metro has been trying to provide its customers a wide range of products at the lowest prices, along
with a high standard of service. This is achieved through professional management
methodology, an efficient supply chain and well-trained staff

Even be competed fiercely but Metro still keep high growth in
2010 with 25% and revenue at nearly $500M, 12 outlets
country wide

Vietnam Retail Key Trends
Internet
Retail

Local
Products

Private
Label

Shop
Display
Social
Respons
ibility

Internet Retailing Still Negligible But Gaining Popularity
For online shopping, 2009 and 2010 were flourishing years, at least in terms of number
of websites. The most common ones were based on consumer-to-consumer
platforms, such as vatgia.com, rongbay.com and www.raovat.net. Although they
were initially set up for consumer-to-consumer transactions, many small- to medium-
sized companies used them to set up virtual shops as a cheap way to advertise their
products to consumers. Besides these consumer-to-consumer platform websites, some
big companies also spent big budgets to revamp their websites to contain an online
shopping section. The most notable examples were the electronics and appliances
specialist retailers, one of which was Nguyen Kim Shopping Centre
.

Current impact
The rising number of online shopping websites definitely raised consumer awareness
towards internet retailing. However, there were also many factors hindering the
growth of this channel. Firstly, the underdeveloped consumer finance system and
strong habit of using cash still made many people hesitate from buying goods online.
Secondly, many people still strongly preferred the ability to touch and feel the
products before purchasing, in which online stores could not compete with physical
stores. And lastly, although the young generation was already very internet
savvy, young people were not the main spenders in a family, but rather their
parents, who were usually much less internet savvy and less open to the online
shopping concept. Because of these reasons, internet retailing remained negligible in
2010

Outlook
Despite many factors negatively affecting internet retailing’s performance in
2010, it was undeniable that consumer awareness was rising rapidly thanks to the
dynamic promotional activities of these retailers and the spreading word of mouth
amongst the young population. As such, the channel is expected to see more
dynamic activities and development over the forecast period as retailers try to
attract consumers’ interest and capture the first phase of internet retailing
development in the country. Having said this, the growth of internet retailing is still
dependent on how fast the consumer finance industry develops, and whether
consumers’ mindset regarding internet retailing becomes more open in the
forecast period.
.

Future Impact
There will be more new players in the field of internet retailing, thanks to the higher interest of
consumers in this retailing channel. Some retailers in other retailing channels such as
supermarkets/hypermarkets or bookstores might diversify their business into internet retailing to
strengthen their position in the retail industry. coIn the meantime, internet retailers might focus on
expanding their product portfolios to appeal to consumers’ attention and to educate
consumers to purchase over the internet. They will try to look for new products which have
unique characteristics or benefits. Therefore, consumers will have to purchase these products
from internet retailers, as they cannot find the same products in other retailing channels. As a
result, consumers will be familiar with internet retailing because they appreciate its benefits.
Nevertheless, internet retailing will not pose a potential threat to other retailing channels such as
supermarkets/hypermarkets, department stores or independent small grocers due to its small
size. The faster growth of internet retailing will not cause consumers to shun store-based retailing
because they will not change immediately their traditional habit of shopping at stores in the
forecast years. Unless internet retailers improve the security of their websites, internet retailing will
have no chance to compete with other retailing channels.
.

Private Label Driven by Retailers

During the review period, private label only accounted for a very small share of value sales. As
private label was still a new concept amongst consumers, the number of private label products
remained small in both grocery and nongrocery retailing channels.
However, towards the end of the review period, there were more private label products in the
market, especially in the supermarket and hypermarket channels, as these retailers started to use
them as a tool to differentiate themselves to attract consumers to visit their outlets. The Big C
hypermarkets, owned by Casino Guichard- Perrachon SA, provided a good example. In 2010, Big
C marketed several private label ranges, such as Wow! Gia Hap Dan, eBon, and Casino. Wow!
Gia Hap Dan from Big C could be considered the most developed private label in the grocery
retail industry, which covered products ranging from household care to packaged food. Casino
Guichard-Perrachon’s main competitor, Saigon Union of Trading Cooperatives, also launched its
own private label, Co.opMart, in 2009-2010. Although Co.opMart was not as developed as Big C’s
private label products, it showed another development to the private label landscape of retailing

Current impact
New private label products from Casino Guichard-Perrachon and Saigon Union of Trading
Cooperatives launched in 2009-2010 received generally good response from the
consumers, which showed that consumers accepted the lower prices despite the economy
image these brands portrayed. The key purchasers of private label products were low-income
and middle-income consumers, as most private label products were positioned in the economy
segment, except for some such as Casino Bio, which was a range of organic packaged food
products imported from Europe. Bakery by Big C and eBon, with products such as freshly baked
Vietnamese baguettes and Vietnamese ham, were some examples of economy private label
products that were highly successful thanks to their good quality.

Outlook

Over the forecast period, private label is expected to grow even stronger than it was in 2009 and
2010. Existing brands will see more expansion in terms of product categories thanks to the
increasing awareness of consumers towards private label products. After the success of the
private label products of Casino Guichard-Perrachon and Saigon Union of Trading
Cooperatives, other retailers are also expected to follow and launch their own such products in
the forecast period.
Private label will also see more development in terms of price and positioning. There is potential in
both the economy and premium segments, as they will target the different consumer trends.
Economy brands will appeal to the bulk of consumers, who like to look for more value-for-money
products, especially in categories where there is low brand loyalty like tissues and some packaged
food products. On the other hand, premium brands would tap the growing niche of the wealthy
consumers in the country.

Future impact
Private label will create another competition venue between the retailers, especially between
the major grocery retailers, such as Saigon Union of Trading Cooperatives, Hanoi Trade Corp, TCT
Group and Casino Guichard- Perrachon. Besides good prices, strong customer service and
pleasant shopping environment, good private label products will also be a strong motivation for
consumers to choose a particular retailer instead of its competitors.
In the long term, private label will also affect the retail landscape of Vietnam in terms of
competition and brands available in the market. As private label grows and become more
important, it will compete directly with other brands in the market, which will also be a
motivation for the existing brands to develop themselves. However, as the value of private label
was still very small in 2010, this is not expected to happen in the early forecast period.

Local Products Get A Boost From the Government

Typically, consumers have a stereotype that foreign brands are better in quality than Vietnamese
brands. Thus, to change this mindset, the government launched the campaign “Vietnamese use
Vietnamese products” at the end of 2009, and extended it to the whole year of 2010. Besides
constant media attention and advertising activities, a major activity of the campaign was the
trade exhibitions. These events, organised by the government bodies, moved across the
country, from big cities like Ha Noi and Ho Chi Minh to small towns and rural areas to promote
and raise awareness of local products. Many local manufacturers participated in these trade
shows as they were a great opportunity for them to showcase their products on a wide scale.
Many retailers also launched their own discounts and promotional programmes for local brands
to take advantage when these brands were in the limelight.
.

Current impact

At the end of 2010, the government announced that the “Vietnamese use
Vietnamese products” campaign was a success. Thanks to the campaign’s
programme, consumers paid more attention to the local brands and products.

The success of the campaign was reflected even more clearly in the major
retailers, including supermarkets and hypermarkets. For instance, Big C
hypermarkets reported that in 2010, local brands accounted for about 90% of the
brands it offered, compared to just over 50% in 2009.

Outlook

With the positive results, Vietnam’s government is predicted to continue
carry on the “Vietnamese use Vietnamese products” campaign over the
forecast period. The government will organise more trade fairs, so that
local retailers and manufacturers can advertise their brands and expose
their products to consumers. Through these events, consumers are able to
witness the improvement and development of Vietnamese products. More
importantly, they can compare product quality between local products
and foreign products more easily to have better understanding of
Vietnamese products.
Furthermore, the government will provide financial assistance, such as
lower interest rates or tax rates, to help local retailers and manufacturers to
have additional budgets for their advertising and marketing activities as
well as to encourage new local players to participate in the retail industry.

Future Impact

As a result of the “Vietnamese use Vietnamese products” campaign, local brands and
products will continue to grow their presence in the country’s retailing landscape. Many
retailers will continue to give more promotions and discounts to local products to gain favour
from the government and the consumers alike. Big retailers, such as Saigon Union of Trading
Cooperatives and Casino Guichard-Perrachon SA, will be the leaders of this trend.

Local specialist retailers, such as Viet Tien Garment Co (VTEC), Phu Nhuan Jewelry JSC and
Viet Fashion Co Ltd, will also benefit from this trend, as they are some amongst the famous
local companies that captured the consumers’ attention in 2010.

Shopping Environment and Convenience

In 2010, the shopping environment became a focused topic for many retailers. As the
consumers, especially those in the urban areas, became more educated and more
sophisticated, they also demanded better shopping environments, such as spacious aisles and
attractive in-store displays. Increasingly busier lifestyles in big cities like Ha Noi and Ho Chi Minh
also introduced the need for retail therapy, as shopping became one of the ways for people to
relax after a stressful day. Thus, places with better shopping environments would attract more
customers than their competitors. Besides, as shopping centres also became new gathering
places for the teenagers and young population, those with nicer store designs and displays
attracted more customers as well.

Convenience was also a focus in 2009-2010, as it also contributed to a better shopping
experience. Many retailers, such as Saigon Union of Trading, offered free delivery service for
customers who made a purchase of a minimum amount. This minimum amount was usually
low, such as only VND200,000 required by Saigon Union of Trading, so that more customers
could leverage on the convenient delivery services and have less worry about the burden of
carrying their groceries home.
.

Current impact

The year 2010 saw many efforts by retailers trying to give consumers a better shopping
environment to answer their need for a better place for shopping and gathering and
to take advantage of the rising trend towards retail therapy. For instant, Big C, the
leading hypermarket chain, replaced its usual in-store shopping basket with new
baskets that had wheels and extendable handles attached, so that shoppers could
drag the baskets along instead of carrying them. The new baskets received good
feedback, as consumers could use much less force and they could shop more with
ease. Besides, Big C also carried out several special events, such as the Fruit Festival in
2010, when it decorated the stores lavishly to attract more customers.

Many other retailers, such as Mobile World Co Ltd, also paid more attention to their
store layout and design than before. Mobile World, especially, rearranged its store
layout for more additional space for customer service and more attractive and
intuitive product arrangement. Thus, consumers felt more appreciated and relaxed
when they shopped at these retail stores.

Outlook

As consumers are expected to be more demanding and sophisticated, together with
the rise of middle- and high- income consumers, the trend towards improved shopping
experience is expected to be carried forwards in the forecast period. Consumers will
constantly expect to receive better customer service, a nicer shopping environment
and more convenient and enjoyable ways to shop. Thus, the retailers will have to
constantly look to keep up with the trend and maintain themselves amongst consumers’
favourite shopping destinations.

Future impact

As this trend is expected to continue growing in the forecast period, retailers will
incorporate new strategies to give consumers better shopping places if they want to
grow and achieve the leading positions. Training for front-line staff will probably be
one of the focus areas for many retailers, as customer service largely affects
consumers’ mood and their purchases. Big companies might have the advantage in
terms of financial capability to hire good training specialists, but small companies will
also have an advantage as they have fewer employees and thus the ability to train
them more easily.

Besides upgrading customer service standards, store design will also be looked at by
many retailers to enhance consumers’ shopping experience. All of these activities will
incur costs, which will be passed down to the consumers. Thus, companies are
expected to be careful with how much they are willing to spend for these activities, as
consumers, no matter what, are still quite price conscious.

Social Responsibility

In 2008 and 2009, the scandal of Vedan (Vietnam) emitting its untreated product waste
into the Thi Vai river in Dong Nai province, which caused serious damage to the
environment and negatively affected hundreds of households living near the
river, raised consumers’ concern for environmental issues. Consumers started to pay
more attention to environmental problems, and many of them started to shift to
purchase from manufacturers and retailers who showed their responsibility for nature.
Besides the fact that consumers were becoming more educated and
sophisticated, constant government educational programmes on saving the
environment also helped to raise consumers’ awareness for environmental issues on a
wide scale.

Current impact
Rising consumer awareness for environmental issues urged the retailers to play their part to show
their corporate social responsibility. This trend was started by the big retailers, especially in the
grocery channels. Following the Vedan (Vietnam) scandal, many supermarkets and hypermarkets
stopped selling the manufacturer’s products to show that they did not support companies with bad
responsibility for the environment. Some retailers, such as Big C, Co.opMart and Lotte Mart, also
encouraged consumers to use recyclable bags instead of plastic bags by having in-store banners
and posters to explain how plastic bags negatively affected the environment. Some retailers even
carried out special programmes to show their care for the environment and to attract consumers’
attention. For instance, Big C ran a campaign to collect people’s used batteries, and through
it, educated consumers the importance of disposing used batteries the correct way, which is less
harmful to the environment.
It is difficult to measure how much these efforts helped the retailers with their sales and revenue, but
they definitely helped the retailers to obtain a positive image in the consumers’ minds.

Outlook

Over the forecast period, retailing players will continue to increase their environmental
activity thanks to their successful activities in 2010. Moreover, consumers are more
aware about the significant affects of the environment on their daily life when the
global warming showed its detrimental consequences such as higher temperature or
pollution. The higher number of environmental activities is also in line with the higher
number of corporate responsibility activities in manufacturing areas.

Together with the environmental campaign executed by government offices, the
contribution of retailing players will enhance the attention of Vietnamese to Vietnam’s
environment. More importantly, the Vietnamese are also beginning to see
environmental protection as one of their responsibilities thanks to the effort of retailers.

Future Impact

In 2010, most of the environmental activities received good responses from consumers.
Especially, most of the retailing players who showed their concern for the environment
gained a good reputation and image in consumers’ perception. As a
result, retailers, including nongrocery and grocery retailers, will expand their activity in
environmental protection as the marketing tool to enhance their reputation and brand
image. More sophisticated activities are expected to take place in the forecast
period, such as using more energy-saving appliances and encouraging people to use
more recyclable bags instead of plastic bags.

Key points to drive retail
competition.

Store Location Supplier Management

ERP & CRM

Store Management Customer
Development

Store Location
1. Where to put my store???
2. We need to understand areas well enough

Traffic: Traffic area, traffic roads, two ways road.

Income Structure Area: Affluent household
area, University area, Factory area…

Population area: population size; male, female
portion; young or old population

Competition or group: Store number/ type density

Motorbike or car park: parking area for customers’
vehicles

Rental fee: that is one of high fee in operation cost
of retail shops.

What should be the best position for the store?

Supplier Management

1. How to make them quick delivery and give good price ???
2. We need to understand suppliers well enough

Loyalty: Factors and attributes that drives supplier
loyalty and satisfaction

Evaluation: How do they rank your store vs.
competitors?

Power negotiation: What are your strength
& weaknesses vs. competitors???

Improvements: Key areas for improvement?

Supplier Management
A decent understanding of your suppliers required

• Power of Purchase
Purchasin
• Frequency of Purchase
g Power
• Ease of order request
• Reliable/ Trust worthy.
• Progressive.
Image
• Store Equity.
• Pricing Strategy.

• Openness/ Receptiveness
• Work with me to improve
Build
my business
Trade
• Share market information
• Is Proactive.
relationsh A preferred
ip
• Category management. Supermarket
• Self Management.
• Clear& standard ordering
process.
• Ethics of purchaser.
Order& • Payment Process.
Payment • Payment abidance.
• Retailer Promotion • Returned goods policy.
• Trade support budget. • Responsiveness to problems
• Sale/Merchandising Trading terms.
MKT/Trad •
Materials.
e Support
• Effective Advertising/
Promotions.
• Speed of implementation

Store Management
In store management is not as simple as looks like

Understand consumer channel choice

Understand consumer behavior within MT
channel

Understand your store equity and
competitors.

Within Stores:
• Understand gross category position.
• Understand the consumer behavior by
category – ranges and merchandizing

Store Management
Understand consumer channel choice

Tradition Shopping
Chain stores Supermarket
market mall

Big stores 500-1000sqm
Big stores 500-1000sqm base in shopping malls
base in districts and sell full range of brand
Many stores 100-200sqm provinces, sell full range products:
Small, street IT shops and base in districts and of brand products: CE, appliances, mobile, IT,
only focus into IT or provinces, sell focus into CE, appliances, mobile, IT, digital
mobile products Mobile, laptop. digital products… products, clothes, cosmeti

Store Management
CE& Clothes, C
Mobile
IT customers Appliance osmetic, lu
customers
Customers xury

Tradition
High Low
market

Med
Chain stores ium
High

Med
Supermarket Low
ium
High

Med
Low High
Shopping mall ium

Store Management
$9-10B&
Volume& Gr: ???
Market size
$5B& CE Gr:
8%, Mo Gr: Shoppin
20%, Laptop Gr: g mall
11%
Tablet Gr: 90%. Future trend
Smart Ph Gr: 50% and now for
Current trend luxury
Super
and now for market
entry and
middle income

$1B& Gr Chain
<10% Store

Tradition Moving customers
al
market

Low trend and
have to
change to
nexts
Growth&
potential

Store Management

Growth

Super
Chain market
Store

Tradition
al
Shoppin market
g mall

Starting Peaking Maturing Changing

Store Management
Shopping trip, shopping behaviors have been
changing over time

Requirement for more choice range:
• Income increase.
• More product availability.
• More new product awareness.

Convenience still the key:
• Near house or easy to get to.
• One- stop shopping.
• Car and motorbike park.

Having experience with new model:
• Ambience& atmosphere.
• Product and service quality.
• Clean and premium decoration.

More family member during shopping trip:
• Family entertainment cases.
• Responsibility sharing for housewives.

Store Management
Understand consumer behavior within MT
channel

In- Store TV media needs to fit within
shopper experience

• On average the customers shop the aisle
for 36 secs, they don’t have time to take in
a 30 sec ad
• Even though shoppers noticed the TV
showing ads placed above the aisle, very
few actually watched
• Consumers would be more open to ad
messages when queuing at the check-out.
Brief ad messages embedded in the
display may be more effective in the aisle
itself.

Store Management

And sales assistants play an important role

• .. 23% who shopped the aisle
made contact with a sales
assistant

Store Management

Use baskets/trolleys encourages purchasing

• .. one third of consumers who
shopped the aisle did not use a trolley
or basket
• ..having an assistant offering
baskets/trolleys means they shop for
longer (average of 39 seconds with a
basket vs 33 seconds with no
basket/trolley) and buy more
(average of 1.45 packs with a trolley
vs 1.23 with none).

Store Management
Understand your store equity and
competitors.

Awareness- 21%

Consideration- 20%

Store Accessibility-
Resource

14%
Efficiency, Loyalty Store Equity
program- 12% Index
Large store format&
wide selection- 12%
Quality products-
11% The Brand Equity model
deconstructs the sources of store
Pricing& VFM- 10% equity to understand its building
blocks

Store Management
Let’s see FMCG: Derived Importance Ranking of Supermarket Store Attributes - All Shoppers
The top 2 attributes driving SEI are related to location and convenience of finding items once in
store, showing people do not want to waste any time when making a shopping trip

Store Management
Competition is fiercer among current players
Coop-mart still has a very strong SEI relative to its competitors in spite of a slight decline. Big C
equity rises significantly putting it slightly above Metro

Store Management
Within Stores

2010
More Same Less Don't know

Entertainment & dining out 22 49 28 0
Home appliances (wash machines, Tv, hifi, etc) 22 55 23 1 What are the most important
Household care products 22 61 16 1 categories????
Communication (telephone/fax/email) 24 55 21 1 • Personal equipment down
Personla care product 25 59 16 0 demand from 6th in 2010
Pesonal equipment (mobile, laptop, etc) 27 51 21 1 to 10th in 2012.
29 59 12 0
Household utilities
• Home appliances still
Transportation 32 48 19 1
lowest demand in 2012
Helath care products/ services 34 53 12 1
But what the hottest products
Food& beverages products 40 52 8 0
Education 57 34 8 1
or technology will led them
2012 growth???
More Same Less
Source: TNS

Home appliances (wash machines, Tv, hifi, etc) 12 62 26
Pesonal equipment (mobile, laptop, etc) 15 64 21
Entertainment & dining out 17 50 33
Communication (telephone/fax/email) 17 60 23
Transportation 21 64 15
Personla care product 23 61 17
Household care products 26 64 11
Household utilities 30 55 15
Food& beverages products 31 60 10
Helath care products/ services 35 58 7
Education 42 49 7

Store Management
What are the most important categories????

Functions
added

Growth

Store Management
Smartphone will lead growth of mobile phone market with many new
designs and functions: camera, video recorder, music, movies….

Mobile
market

5 models 20 models 22 models 15 models

Store Management

Working/ Entertain
ment
creating

Working

Entertainment

Store Management
Tablet will be add growth of PC market when it make people
comfortably with its entertainment functions.

PC
market

3 models 1 model 4 models 6 models 1 model

Store Management

Functions
added

Smart TV

LCD/Plasma TV

CRT TV

Growth

Store Management
Within one category, what brands / items should be
on your range?

Which category contributes big sale volume and which one is add
value???
Big margin come from what category??? And which one is price
competition.

How’s cycle life of each product/ brand??? And How’s demo time
of each product/ brand???

How is display space cost/ product/brand???

Which category or models of brand is the hottest one, great
growth??

Store Management
Stock management

Sufficient stock level

Under stock level

Over stock level

Store Management
Consumer Centric
Simultaneous Merchandise Planning
Financial
planning, strategy
and goal Optimized Assortment

Clustering CDE Math model automatically
creates localized assortment
Space
Clustering done at for every category/
planning
category level based on cluster/POG/ Store
customer buying patterns combination
Merchandis
e Planning

Merchan Financial
Real time simulations:
dising objective New Merchant review and
rules s product applies art
Shelf and
forecasti
product
ng
dimensio
ns
Clusterin
g
Incremen
tal

CDE Decision
trees

Cannibal
ization
Product
attributes

Store
Loyalty
handling
Store and
Supply restockin
replenish
chain g
ment

Store Management
Space Planning by Planograms

Store Management

How to optimize product selection and shelf merchandising at
See the store level to put the right products in each store for your
customers
What you are
missing???

Manage the shelf more effectively to ensure that the right
Act product assortment is appropriately merchandised to meet the
needs and buying habits of consumers in a specific store
Faster with greater
confidence

Ensure appropriate space utilization, merchandising and stock
Win levels so that customers leave the store satisfied and with your
product in their shopping bag
At the shelf

Customer
Development
What and when influence consumer decisions?

Customer
Development
Pl’s see a research of Nielsen: Auto-pilot is a dominant trigger for store choice.
Location is another driver. Promotions only play secondary roles in triggering
more shoppers.

Customer
Development in
Should examine which shopping behavior is prevalent
categories? And see a research of Nielsen for FMCG:

ERP & CRM
Human

WEB

Purchasin
Suppliers
g

Sale

Customers Shops

Customers
Services database

Marketing
&
customer
care
Call Center

Finance

Ware
house

Potential Operation Loyalty
In front System
customers system Relationship

ERP & CRM
Point of
Purchasi sale
Inventory
ng Manage
ment

Credit
Manage
ment

Merchan
ERP dising

Marketin
g& CRM

Service&
Repair

Financial
HRM&
Accounti
Payroll
ng

ERP & CRM
The aim of marketing is to know and understand the
customer so well that the product or service fits him
and sells itself

ERP & CRM
Mobile and tablet Solution

Mobile
Solution

ERP & CRM

Discount card

Warranty card

Training course

Payment card

Point
accumulation
Apps store card
Value added card

Who are Players???
 SOCIALIST REPUBLIC OF
VIETNAM
 Capital: Hanoi
 Area: 331,210 km2 Hai Phong
 Population: >80M people
 Divided into 3 main regions
– North
– Central
– South Da Nang
 5 Cities (population)
– Hanoi (6m)
– Ho Chi Minh City (7m)
– Hai Phong (1.8m)
– Can Tho (1.2m)
– Da Nang (0.8m)
 58 Provinces

Can Tho

Who are Players???
Strate Prod Reve City
No Shops gy ucts nue SWOT
Base

226, hu Price Laptop, mobil $150M in 2010 63 cities, while Strength:
man competition e, CE and and estimate HCM big + Well known brand with mass
staff: and mass appliances $300M in 2011 number with customers in Vietnam.
3,000 market with products. 51 (22.5% + ERP& CRM strong
people mass chain Besides buy total number comparing with others.
. store in nation and sell RFB shop) + Mass stores in nation wide
wide. products, acc with 63 cities but most strong
Plan to set up essories. in HCM.
The Gioi Dien No private + Strong in mobile and laptop
May with label market with competing price.
department products. + Nice decoration and
store of CE and convenience shop with
appliances. motorbike parking.
Set up + Strong in management
CafeF, Apple human.
shop but not + Strong investment by
success then Mekong Cap.
close. Weak:
Mekong Cap + Cost operation is high.
invest into + Low trained sale-man.
Mobile World. + Risks from locations
changing.
+ Loyal of customers is low
and sensitive with price.
+ High cost but sell
competing price is not long
term especially bad
economy now???
+ Not strong in CE and
department store

Who are Players???
Base

43, hu Price Laptop, mobil $60-70M in 22 cities, while Strength:
man competition e, accessories 2011 HCM big + Well known brand with
staff: and mass products. number with customers in mobile market.
500 market with No private 16 (37% total + Mass stores in nation wide
people mass chain label number shop) with 22 cities but most strong
. store in nation products. in HCM.
wide. + Strong in mobile and laptop
Plan to set up market with competing price.
and invest + Nice decoration and
into S&T convenience shop with
shops. motorbike parking
Weak:
+ Cost operation is high.
+ Low trained sale-man.
+ Risks from locations
changing.
+ Loyal of customers is low
and sensitive with price.
+ High cost but sell
competing price is not long
term especially bad
economy now???
+ Low tech in ERP and CRM.
+ Weak management
human.
+ Weak in Marketing
operations

Who are Players???
Base

10, hu Price Mobile and $10M-$15M in Just focus in Strength:
man competition smart 2011 HCM city + Well known brand with
staff: and focus phone, tablet customers in HCM mobile
400 into mobile , accessories market.
people chain stores in products. + Strong in mobile and smart
. HCM city. No private phone with competing price.
label Weak:
products. + Cost operation is high.
+ Low trained sale-man.
+ Risks from locations changing.
+ Loyal of customers is low and
sensitive with price.
+ High cost but sell competing
price is not long term especially
bad economy now???
+ Low tech in ERP and CRM.
+ Weak management human.
+ Weak in Marketing operations.
+ There are many claims about
service and management inside:
http://www.5giay.vn/chuyen-tro-
mobile/1809621-phuoc-lap-
mobile-phuc-vu-qua-te.html
http://diendan.vienthonga.com/
tin-tuc-chung/bi-mat-chua-
duoc-bat-mi-cua-phuoc-lap-
mobile-21416.html

Who are Players???
Base

23, hu Price Mobile, smart $33M in 2011 Mainly base Strength:
man competition phone, tablet in 2 big cities: + Well known brand with
staff: and focus and Hanoi and Ho customers with brand FPT in ICT
300 into laptop, acces Chi Minh with market.
people mobile, lapto sories 11 stores. + Strong in investment by FPT with
. p chain stores products. $12M.
in nation Have private + Support by price, logistics and
wide. label product products from FPT Trading group.
Plan in 2014: call Fmobile. + Invest in ERP and CRM.
150 shops + Invest into high level manage
and $200M. human.
However, FPT Weak:
failed quite + Cost operation is high.
many times in + Low trained sale-man.
previous + Risks from locations changing.
years. + Loyal of customers is low and
sensitive with price.
+ High cost but sell competing
price is not long term especially
bad economy now???
+ Internal cooperation: too many
layers and levels.
+ Set growth target too high with
one – two shops per month while
human and management
system not yet set up and run
well.

Who are Players???
Base

5, hum Focus Mid Mobile, smart $5-6M in 2011 Mainly base Strength:
an staff and high-end phone, tablet in Q1, Q3 in + Well known brand shop in
under customers , luxury HCM, that luxury phones.
100 with luxury products and rich area. + Be the first shops invest much
people phone, pen accessories into mid and high end segment.
. and premium products. Also + Premium designed space.
design. sell second Weak:
hand + Service and not all products
products. not equal to mid and high-end
Have a customers.
separate + Location base in rich District
website of but location not base in traffic
Luxury ones. road and not easy for packing.
No private + Weak Management human
label and family base.
products. + Low ERP and CRM application.
+ No loyalty program for
customers, that is very important
with high-end system.

Who are Players???
Base

134, hu Price Mobile $90-100M in Coverage full Strength:
man competition phone, tablet 2011(estimate nation wide + Take advantage from Viettel
staff and focus and ) with 64 operators registration shops
more into laptop, digital provinces already set up in 64 provinces.
than mobile, lapto camera, offic and cities. + Take advantages from logistic
1,500 p, tablet e, accessories and Telco networking database
people chain stores in products. customers.
nation wide. No private + Support price and margin from
label Sim card to cover price of
products. mobile phone…
Weak:
+High operation cost from
human and coverage network in
nation wide.
+ Low service and low trained
sale staff.
+ Weak human management.
+ Low ERP and CRM
management.
+ Ethics of import human.

Chain Store Map
No
Sho
p

S M H Quantity: Sale, No
Shop cover margin:
H H
1. Mass market.
2. Entry segment.
3. Price competition.
4. Low margin.
5. Big coverage.

Cov
Hum
an M M erag
e

Quality: Add value
service to cover high
price
1. Niche market. S S
2. Mid and High
segment. S M H
3. Service
competition. Reve
4. Loyalty. nue

Who are Players???
Base

16, hu Focus into Mobile, lapto $400M in Coverage Strength:
man supermarket p, tablet, CE 2011. Sothern area + Well brand in CE& appliances
staff model with big and while 6 market.
more building store appliances, d department + Build good service for
than and coverage igital store base in customers and have separate
3000 full lines of products. HCM, 10 service centers.
people products: No private remains in + Long year experience in retail.
CE, appliances, label others cities + Own location by themselves.
mobile, Digital. products. but only one + High trained staff.
Build up image of in Hanoi. Weak:
high service and +High operation cost from big
quality brands. human and own property.
Already + Weak human management.
expanded to + Low ERP and CRM
chain store but management.
just have close. + Ethics of import human.
+ Not strong in North area.
+ Request high margin and not
all suppliers can serve.

Who are Players???
1. Brand by quantity
of shop and coverage No
area. Sho
2. Balance risky from p
business in many
areas especially go
ahead to rural area.
H M S
H S

Prod
Cov
ucts
erag M M rang
e
e

1.Brand by service
and product range.
2. Balance risky from
S H
business in many
S M H kinds of
products, brands.
Reve
nue

Vietnam Retail Market, 2012

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Andere mochten auch

Andere mochten auch (20)

Ähnlich wie Vietnam Retail Market, 2012

Ähnlich wie Vietnam Retail Market, 2012 (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Vietnam Retail Market, 2012