Competition for retail market is becoming more intense when
Parkson has closed almost all of its existing shopping centers, Lotte reported a loss of VND 800 billion and Shop&Go has recently sold itself at USD 1. How to survive and not to be eliminated from the competition are of interest to retailers. Reporters discussed this issue with Mr. Nguyen Anh Duc, Deputy Chief Executive of Saigon Co.op.
How do you find about the existing competition in the retail market when a wide range of foreign retail giants are investing in Vietnam whereas quite a few are suffering loss and making an exit?
First, it is advantages of the open retail market. As far as we are concerned, foreign retail market participants have long-established experience and healthy financial capability. Thus, operating in the same sector will give Vietnam’s retail market resilience, and domestic firms will have to take sharp upturns to meet consumers’ demands.
In this competition, I find that domestic retailers need to be aware of concerted effort to create synergy, improve service quality, ensure quality and price, and offer promotions and after-sales services effectively. At the same time, we have to take good advantage of competitive advantage in the domestic “play ground” to expand network, develop
professionalism from distribution, supply chains, management capabilities, goods and business model diversification strategies to better serve customers.
In order to achieve this, authorities play extremely important roles in planning and
orientating via policies. In a short-term, the draft commercial development strategies by the Ministry of Trade and Industry is expected to be finalized to help businesses make a breakthrough in the future.
Apart from competition between both foreign and domestic retailers, the explosion of e-commerce is posing a threat to “take over the throne” of traditional retail. What will retailers have to do to stay out of the competition?
E-commerce is an inevitable trend. There is a saying that “investment in e-commerce now results in big losses”, but if we do not do that right now, we will even “incur bigger losses” related to loss the opportunities to serve customers.
In this trend, every retailer will take direction either from-offline-to-online or vice versa. Given different retailer with different approach, Saigon Co.op opts for a reasonable one that is still able to meet consumers’ demands for online experience while maintain offline traditions. For instance, we have introduced two tech applications, including Co.opmart on smartphone app and advanced online shopping sites. With user-friendly interface, simple and easy-to-use operation, the app has been well received by consumers. In further future, we continue to invest in e-commerce in an attempt to bring consumers the best experience ever.
Given losses incurred, various retailers have sought for merger and acquisition, which has left the only two Vietnamese retail giants, namely Vinmart and Saigon Co.op in the competition. What is “the secret” of Saigon Co.op’s survival?
In fact, there are two approach for retailers to thrive. Firstly, it is sustainable development or organic growth that means the retailers develop and possess their own business model, and continue to thrive with the passage of time. Secondly, growth via merger and acquisition first requires strong organic growth on a firm ground.
We choose the first approach that is more suitable and reasonable, but in a certain condition, we will carry out merger and acquisition. As you can see, from merely VND 1 billion at onset, we recorded a total revenue of over VND 30,000 billion in 2018, a 30,000-time increase after 30 years. The whole system is currently attracting over 1 million customers to visit and purchase per day.
In the 2019 strategy, Saigon Co.op is aimed at increasing the number of retail points to over 1,000 nationwide. Is this ambition overwhelmed to a domestic retailer?
Up to now, we owe nearly 700 retail points all over the country. Our plan to increase from 700 to 1,000 retail points is definitely plausible. Apart from existing business models such as Co.opmart Supermart, Co.op Food shop, HTVCo.op TV shopping channel, Co.opXtra supermarket, Sense City shopping center, Co.op Smiles modern convenience store, Cheers 24h convenience stores, we continue to develop more advanced and modern models, i.e., high-end Co.opmart expected to be launched in 2019. The development of such new models will enable Saigon Co.op to gain more competitive advantages in terms of purchasing power, better exploit goods and more competitive prices.
Meanwhile, we will focus on implementing various major projects related to retail business model standardization, logistics capability improvement, new distribution channel
development, technological strategy, Data Mining development, performance reviews based on KPIs and so on to complete the operation mechanism for better effectiveness.
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