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Retail expenses up by 20-30%
Inflation has led retail expenses to increase by 20-30% in recent days. Retailers are threatening to stop selling, while suppliers are threatening to stop providing goods.
Idle threats?
Tran Ngoc Tuyen, Head of the External Affairs of FPT Retail, said that the inStore retail system of FPT Retail has set three requirements on mobile phone and laptop suppliers. The three requirements are 1/ raising the discount rate by 20% (the currently applied rate is less than 10%) 2/ extending the inventory duration from 30 days to 60 days while keeping the same discount rate and 3/ subsidising advertising and gifts for promotion campaigns.
“We don’t want to put difficulties on suppliers, but we really have to do that,” Tuyen said.
A Communication and The Gioi Di Dong, also mobile phone retailers, said they are ‘sharing difficulties’ with suppliers. Hoang Ngoc Vy, General Director of A Communication, said: “It would be the worse course of action to set up too many requirements on suppliers. We only ask them to give support in promotion campaigns.”
The Gioi Di Dong has also asked suppliers to provide money for gifts in promotion campaigns, according to Huan, Business Director of the retail network.
Meanwhile, producers are trying to cut all expenses for promotion campaigns and supporting sales agents. Mai Tan Dung, Deputy Director of Lan Hao Cosmetics Company, said that he knows a lot of companies which have changed modes of distribution. Sale agents have to pay cash right on delivery. Only loyal sales agents can make deferred payments, but they have to pay within a month instead of three or six months as previously.
An electronics and home appliance supplier also said that several small sales agents had demanded higher discount rates, but he said ‘no’. “We cannot give more than what we have given,” he said.
Analysts say that the average expenses for retail and distribution have increased by 20-30%.
According to Tran Bao Minh, Deputy General Director of Vinamilk, as bank interest rates keep skyrocketing, producers dare not borrow money to store materials and packaging. Retail agents who have capital have become lazier in doing business because they find making deposits at banks more profitable than doing business. Meanwhile, agents who do not have much capital are not purchasing goods in large quantities.
The fact that companies have cut expenses for promotion campaigns has, to some extent, affected the sales of commodities and pushed retail prices up. Sale agents say that purchasing power remains low because there are no promotion campaigns and gifts to stimulate demand.
VNN
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