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Domestic operators mull ways to beat int’l retail threat
With domestic manufacturers and distributors under pressure from international retailers, they should join hands to take on the latter, a distributor has said.
The pressure is set to increase in the new year when Vietnam has to open its market to foreign retail and distribution firms as part of its World Trade Organization commitments, Pham Hoang Ha, vice chairman of Phu Thai Company, a major northern-based distributor, said.
With Vietnam ranked first by A.T. Kearney among emerging markets this year, foreign retailers already present in the country also are scrambling to establish more outlets.
The market shares of Metro Cash & Carry and Big C are on the rise, he said.
In the future, Vietnamese retailers would have to compete with international giants like Wal-Mart, Carrefour and Cosco, Ha said.
The pressure also affects manufacturers who are “in danger of being taken over by foreign businesses,” he said.
Vietnamese retail buying last year was worth nearly US$45 billion, with five leading domestic retailers accounting for around 3 percent of that, according to A.T Kearney.
Ha said that in this scenario domestic distributors should join hands with producers to face the international threat.
Entrepreneurs gathering in Hanoi last month for a conference on ways to cope with the high inflation also suggested the same strategy.
Once the two become partners, they said, they should discuss and provide each other assistance, share costs, and stabilize prices to increase consumption.
Tran Qui Thanh, chairman of the Binh Duong Province-based Tan Hiep Phat Company, said producers and the distributors should reconsider costs through the entire process from producing to retailing so that they can sell at reasonable prices.
Only then can they stimulate demand in the current context of inflation and foreign competitiveness, Thanh said.
Ha said local businesses always have the advantage in understanding local consumers’ buying habits and psychology.
If they know how to make good use of it, they can increase consumption of local products, he said.
Changes and adjustments
Inflation is changing the expenditure pattern of Vietnamese consumers, with consumption of unessential goods decreasing.
Nguyen Ngoc Hoa, chairman of Saigon Co.op, the country’s leading retailer, said the sale of unessential at his retail chain has gone down by 2 percent compared to last year.
The sale of essential goods has, however, increased by 2 percent, he said. Processed food sales have seen the highest increase (5 percent), while that of cosmetics has fallen 3 percent.
While the chain’s turnover increased by 38 percent in the first half, it was mainly because of the price hikes and promotions, Hoa said.
In response to the changes, Co.op Mart is attaching priority to goods that have the high sale rather than to variety
Thanhnien
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