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Retailers plan expansion as sales remain in fast lane
Many retail chains are planning to expand their business since sales continue to grow in Vietnam despite the global downturn.
Leading chain Saigon Co.op opened a new outlet in the southern province of Binh Phuoc Tuesday and the Ho Chi Minh City-based retailer will open another in Ba Ria-Vung Tau Province on Friday, its 37th.
Nguyen Thi Tranh, Deputy General Director of Saigon Co.op, said the two outlets, to cost more than VND134 billion (US$7.5 million), are part of an expansion plan under which 12 outlets would be opened nationwide this year.
With four outlets already opened, there are eight more to go and the company is “speeding up to meet the deadline,” Tranh said.
Saigon Co.op plans to have 100 outlets by 2020.
Its revenues last year were VND6.35 trillion ($372 million), 48.9 percent up from 2007, and it expects this to rise to VND9 trillion this year.
Nguyen Anh Hong, owner of retailer Maximark, said her company is also “running at full throttle,” spending more than VND150 billion to build a new supermarket in the resort town of Nha Trang and upgrade one of its supermarkets in HCMC.
Nguyen Anh Hoa of Citimart also said her chain, which opened four outlets in the last few months, plans to open 10 more soon.
Foreign firms too have joined the rush to expand.
French retailer Big C said it would open its ninth Vietnamese outlet in Hue next July at an estimated cost of $17 million.
South Korean retail giant Lotte, since debuting in the country with an outlet in HCMC’s District 7 last year, said it is set to open a second one in the city.
Lotte announced last year it would invest $5 billion to open 30 shopping malls in Vietnam. Its $75 million mall in District 7, covering an area of 31,000 square meters, is now the largest in the country in terms of space.
With the world’s 13th-biggest population, Vietnam has a large domestic market whose purchasing power is rising rapidly. Retail sales last year were worth $58 billion.
Retail sales of goods and services grew 21.5 percent in the first four months of this year, according to the General Statistics Office in Hanoi. The economy expanded by just 3.1 percent in the first quarter, the slowest since at least 1991.
The “astounding” recent growth in retail sales in Vietnam “shows that consumption remains very strong,” HCMC-based Fund Manager Dragon Capital said in a note late last month.
The positive domestic sales figures are in stark contrast to the retail situation around the world.
British retailer Marks & Spencer, for instance, said Tuesday its annual net profit slumped nearly 40 percent due to an uncertain economic outlook. The company, seen as a key indicator of consumer confidence, said net profit in the year to March 2009 dropped to 508 million pounds ($620 million), AFP reported.
Reports over the past week also showed a 0.4 percent drop in US retail sales, suggesting American consumers are not yet ready to resume their spending ways in view of ongoing job losses.
Vietnamese retailers said there is an urgent need to open more outlets, not only because the market is expanding but also because they are feeling threatened by foreign retailers.
Nguyen Thi Hong Huong, Director of Vinatexmart, a retail chain owned by the Vietnam National Textile and Garment Group, said her chain is planning to work with Saigon Co.op to open new supermarkets to compete with foreign firms and avoid competition with each other for good locations.
Huong said her chain is famous for its garment products while Saigon Co.op has an advantage with fast moving consumer goods. If both sides can reach an agreement, the joint venture would be “a good weapon to fight against foreign retailers,” she said.
thanhnien, agencies
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