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Retailers battle falling demand
"Sharing with consumers" is one of the most common strategies that retail enterprises are adopting as they try to survive at a time most consumers are tightening their belts, a conference in HCM City has heard.
Experts said at the conference last week that 2012 was set to be a specially difficult year for retailers since the market's purchasing power was dropping strongly.
In 2011, the country's total retail turnover of goods and consumer services increased by only 4 per cent, much lower than the average 11 per cent recorded in the 10 previous years.
In the first four months of this year, the situation looked worse, they said.
According to the Ministry of Planning and Investment, in the period the country had 17,735 enterprises dissolve or stop operations. Of these, 5,379 were involved in wholesale and retail trading.
Pham Thanh Cong, senior expert with market research firm Nielsen Viet Nam, said the prolonged economy slump was forcing consumers to save more.
In 2011, Viet Nam's savings ratio climbed to 70 per cent, much higher than Asian people's average level of 59 per cent.
Sixty-three per cent of shoppers were very price conscious and seeking ways to save most while shopping, Cong said.
The situation in the domestic retail market was not much better in the first quarter of this year, he said, adding that turnover had dropped by between 10 and 40 per cent at several supermarkets.
Methods
To increase their sales turnover, retail enterprises found it necessary to "share with consumers" by cutting prices and offering sales promotions.
Sales promotions with attractive prices could help retailers prompt consumers to loosen their purse strings a bit, Cong said.
The deputy general director of a major supermarket chain in HCM City, who declined to be named, said that his company had to reduce profits and cut costs in order to have the money to launch several sales promotion programmes to attract customers.
In the first quarter of this year, his supermarket network's spending on sales promotion increased by 30 per cent compared with the same period last year, he said.
Danh Quy, head of Sai Gon Coop's investment and planning office, also said that consumers were paying a lot more attention to prices so supermarkets would not be able to sell goods if they did not have sales promotion programmes.
"In addition to trying to offer attractive prices, we have also carried out several other measures to sharpen our competitive edge, with focus given to core business goals, safe investments, effective financial management, and improvement of management technology," Quy said.
Sai Gon Co-op was also improving co-operative ties with companies and localities nationwide to ensure sourcing of high quality goods at competitive prices, he said.
Many speakers at the conference said retailers should be more realistic and active and seek ways to cut costs, reorganise their administration and divide risks.
They also advised retailers to clearly define their proper market segments while seeking new markets, improving the capacity of their distribution network and building brand names.
Dinh Thi My Loan, general secretary of the Viet Nam Retailers Association, proposed that the Government quickly reduce corporate income tax to 20 per cent and closely control prices of electricity, water, coal and fuel. This was needed to help enterprises minimise their input costs, she said.
She also said that a support fund for small and medium enterprises should be set up to enable access to capital they needed for maintenance and development.
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