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Vietnam Retail Market, 2012

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Vietnam retail market 2012 and focus into CE, mobile and tablet market segments

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Vietnam Retail Market, 2012

  1. 1. Vietnam Retail Market By Dunglt Year 2012 Note: Confidential
  2. 2. Menu Country Vietnam factsheet. Industry Vietnam retail market. Retailers Key points to drive retail competition. End-user Who are players???
  3. 3. Vietnam Factsheet GDP Index. Population index. Macro economy. These factors will create market trends and affect to sophisticated demand of customers, models or investment of retail owners.
  4. 4. Vietnam Factsheet GDP (%)10 9 8.5 8.5 8.2 8 7.7 7.2 6.8 7 6 6.2 5.9 6 5.5 5.3 4.8 4.7 5 4 3 2 1 0 Y1999 Y2000 Y2001 Y2002 Y2003 Y2004 Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011 GDP growth YoY shows down trend from Y2010 and beginning of Y2012 has some signals of deflation but still in the emerging growing countries.
  5. 5. Vietnam Factsheet Aver Income45000 40,07040000 Average35000 income, Vietnam still 31,800 lags behind others in30000 ASEAN but from 201125000 Vietnam stand out of poor countries. As20000 Y2010 TNS South Asia15000 forecast, around 2015 Vietnam can10000 7,760 have chance to 5000 2,060 2,500 4,150 surpass Indonesia 1,040 1,160 0 750 and Philippin.
  6. 6. Vietnam Factsheet Monthly Household Income100% 1% 3%90% 9% 33%80% 21% Upper middle class in Urban70% <2.0M VND Vietnam now constitutes60% 65% of pop But only makes <3M VND up about 30% of total 29% <4.5M VND50% population. <6.5M VND 46% Source: TNS VietCycle 2011 –40% <13.5M VND Hanoi, HCMC, Danang Can30% <15M VND Tho only 21% 15M+ VND20% 10% 9%10% 5% 10% 0% 3% Y1999 Y2011
  7. 7. Vietnam Factsheet
  8. 8. Vietnam FactsheetVietnam just start urbanization time
  9. 9. Vietnam FactsheetTwo thirds of Vietnam’s population is still eking out a day to day existence, while 5% are asaffluent as the western worldAs far as luxury goods and services, the market is still estimated to be small roughly 4%-15% ofurban households, the equivalent 1 million to 4 million consumers or 800,000 – 200,000 householdsAlmost four of every 5 rural consumers still are BOP, thus placing VN wealth into perspective Urban& Rural Gr Vietnam1.50% 5.60% 3.90% 11.00% 15.00% 29.00% 34.00% 15M+ VND <15M VND <13.5M VND Rural 1.00%6.90% 0.60% 1.60% 12.00% 31.90% 46.00% <6.5M VND <4.5M VND <3M VND <2.0M VND Urban 3.70% 10.80% 13.50% 21.60% 22.20% 21.40% 6.80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Wealthy Affluent Middle BOP
  10. 10. Vietnam Factsheet2nd youngest population in AsiaVietnam’s consumption days are still ahead - 57% under 25(Source: GeoHive)
  11. 11. Vietnam Factsheet3rd largest female working population in AsiaFemale consumers will become more and more important inshopping consumption (Source: ADB)
  12. 12. Vietnam FactsheetSmallest urban population in AsiaVietnam shall experience an urbanization explosion like ChinaSource: Country Statistics Offices
  13. 13. Vietnam FactsheetSources: Main 2010 vs 2011 vsindicators 2010 andQ1 2011, GSO 2009 2010GDP Growth YoY +6.8% +5.9%Lending Rate 16-17% 22- 25%Inflation (AverageYoY) 9.2% 18.6%USD/VND (Official 19,500 21,036Dec 31st)Implemented FDI 11 11(Bil USD)
  14. 14. Vietnam Factsheet About two-thirds of the leaders feel business conditions in Vietnam have deteriorated Source: AC Niensel Business Conditions in Vietnam (Now vs. Year Ago)100% 2% 2% 3% 9% 9%90% 12%80% 30%70% 38% 61% 57% Deteriorated Significantly60% Deteriorated Somewhat50% Remained the same40% Improved Somewhat30% 54% Improved Significantly 40% 19%20% 30%10% 14% 6% 0% 1st Half 2010 2nd Half 2010 1st Half 2011 2nd Half 2011
  15. 15. Vietnam FactsheetGlobal economic crisis shows up in the top 05 concerns for the very firsttime. Inflation is still a top burning concern of businesses, Source: AcNiensel
  16. 16. Vietnam FactsheetConsumer Confidence has also been dented in 2011, thoughshowing some positive upswings in Q4, but normally Q4 is bigshopping season so maybe after that will be deeply down trend
  17. 17. Vietnam FactsheetPremium segment increase while value decrease overtime, indicating trading up trend from consumers in some categories
  18. 18. Vietnam Factsheet ConclusionShort term concerns: Macro economy Long term concerns: even facing shortshows some issues that Vietnam have term troubles from general economyto face during 2011-2013: however Vietnam still show potential1. GDP growth decreases and even strength come from: deflation signal in the beginning of 1. Big demand of 90 million 2012. population.2. High inflation nearly 20% affect to 2. Young country and young saving pocket of consumers. demand, young trends.3. High input cost caused by 3. Female contribute big increasing gas, petro and consumption in the near future. electronic price… 4. Growth in income and broaden4. Decreasing foreign investment. mid and high income household.5. Unstable of exchange rate go up 5. Urban and rural growth more than price of import goods. 100%6. High bank interest rate raise bank 6. High-end segment still increase expenditure. despite bad economy.
  19. 19. Vietnam Retail Market Vietnam Retail Index. Vietnam Retail Volume. Vietnam Retail Key Trends Key points to drive retail competition.
  20. 20. Vietnam Retail Market As A.T.Kearny report Vietnam stand at 23 in the most attractive retail market in Y2011 and slip 9 points from Y2010 due to low growth GDP and unstably of economy policies. 1. 2008: No 2. 2. 2009: No 6. 3. 2010: No 14. 4. 2011: No 23.
  21. 21. Vietnam Retail Market Vietnam at Peaking area of Cycle. During 2011, retailing continued to experience faster expansion as consumers had more sophisticated demands and lifestyles. Higher living standards and rising disposable income allowed consumers to have additional budgets for products to improve their quality of life. Clothes, electronics and home appliances, and jewellery were some of the products that gained much attention from consumers in the review period.
  22. 22. Vietnam Retail MarketVietnam is potential market with high score but quite risks come from the government policy and economy.
  23. 23. Vietnam Retail MarketLuxury Retail – With regard to Gucci and Louis Vuitton, Lacoste already have bigstores in 2 big cities in Vietnam: Hanoi and HCM.Zara and H&M will coming soon to Vietnam.
  24. 24. Vietnam Retail MarketCompare with retail big cities in area, Vietnam’s still far behind of them (retailsqm/ person) and that is potential market Vietnam should explore.
  25. 25. Vietnam Retail Market MT appears to be growing during the recession in terms of dollar value spent per outlet type and has been for some time. During the review period, modern retail channels continued to emerge despite Model of Channels the dominance of traditional channels. Consumers became more used to100% 4.8% 4.7% 4.4% shopping at modern grocery channels90% such as supermarkets, hypermarkets and 17.0% 18.0% 18.7% convenience stores thanks to their80% pleasant environment as well as their70% diversified product portfolios. In 14.0% 13.3% 12.3% addition, modern grocery channels tried60% Others their best efforts to offer consumers fresh 61.5% 61.5% 62.3% Specialty food and to lower their prices to50% Morden Trade compete with traditional channels.40% Market Consumers also preferred to come to modern nongrocery stores such as30% Grocery Store clothes and beauty specialists, rather than traditional stores located in the wet20% markets, because they could freely look10% or try on products that they wanted. 0% Y2007 Y2008 Y2009 Source: TNS
  26. 26. Vietnam Retail Market Supermarkets are dominating Modern Trade Monthly MT Shopping 2% 8% 11% Mini market Hyper market 50% Cash & Carry Supermarket Have not shopped 29%Source: TNS
  27. 27. Foreign Direct Investment in Retail1. Foreign companies can invest in Vietnam by many ways, such as establishing subsidiaries, joint ventures with local companies or 100% foreign invested companies. Specifically for the retailing industry, the law used to limit the amount of capital foreign partners could contribute in the local business to 49%. From 1 January 2008, the law was lifted and companies could have bigger capital contributions, yet they still needed partnerships with local players. From 1 January 2009, the new law allowed foreign companies in the retailing industry to establish 100% foreign invested companies in Vietnam. This implementation aimed to make it easier for foreign companies to enter Vietnam, which was in line with the agreement made by the government when the country joined the World Trade Organisation (WTO) in 2007. Nevertheless, the entrance of multinational companies in 2009 and 2010 was not very dynamic due to various reasons, such as the global economic crisis, complicated administration procedures and underdeveloped infrastructure2. The government has improved infrastructure as rapidly as possible to support domestic and foreign retailers. Although the market is open and international retailers are welcomed, the companies also face strict supervision regarding currency transactions and 25% income tax on profits.3. In the review period, the government put its effort and resources to improve its services such as shortening the time of its document process, but the document process remains complicated and time consuming in the opinion of both local and international retailers
  28. 28. Informal retail1. Informal retailing only accounts for a small part of the total market. Informal retailers are typically in the form of street vendors or websites. Street vendors can be found easily throughout the country, from urban to rural areas, and they form a part of Vietnamese culture. On the other hand, websites, which were mostly consumer-to-consumer, mushroomed over less than five years during the review period thanks to the rapid development of internet service and the modernization of the urban population in the country2. Due to its un-organised and fragmented nature, informal retailing is usually operated by individuals. A wide range of products can be found from informal retailing, such as fresh produce from neighbouring countries like China, Cambodia and Thailand, to hand-carried luxury items from Europe and the US. The quality of these products is usually unguaranteed, and their prices are also not fixed, and subject to the negotiation and bargaining between sellers and buyers3. Whilst the traditional channel of street vendors was stagnant, websites saw rapid development over the review period. Many consumer-to-consumer websites were set up, which led to the entrance of eBay in Vietnam in 2008. However, because the consumer finance market in the country was still underdeveloped, and many consumers were still worried about the internet security system of these websites, most of the activities online were limited to advertising and product ordering4. By 2010, Vietnam’s law on intellectual property protection was still in draft despite the fact it had taken a long time to develop. Thus, informal retailing still faced not much of a threat. Moreover, the government has been known to be not very strict in terms of enforcing regulations when it comes to controlling these informal channels. Thus, consumers still had to find ways to protect themselves from potential issues when they purchased from these channels, such as counterfeit products, low-quality products or cheating
  29. 29. Retail Landcape1. Location is regarded as one of the most significant factors for retailers. A good location brings higher possibility of success for most retailers, including grocery and non-grocery retailing. The ideal locations are located at the central areas of big cities such as Ho Chi Minh City, Ha Noi and Da Nang. These places typically have high traffic and good infrastructure. Constantly rising leasing and rental fees in the review period made choosing a good location a difficulty for many new retailers2. Growth of rental fees in the big cities is expected to slow down in the forecast period, thanks to the rapid development of new shopping centres in 2009-2010. In addition, many retailers are finding new opportunities in suburban and rural areas to avoid the high rental fees in the major cities, and also because the majority of the market lives in these places3. Retailers of luxury brands are usually located in new and modern shopping centres or department stores. Some notable shopping places for luxury brands are The Opera Business Centre, Luxury Mall, Vincom and Saigon Paragon. They are well-known shopping centres where consumers and tourists can enjoy shopping for many international luxurious brands of clothing, cosmetics or jewellery4. As traditional retailers still contribute a major portion of the Vietnam retailing industry, shopping malls did not any major effects on these retailers over the review period. Moreover, as the target markets of the shopping malls and traditional retailers are very distinct, these channels are not directly competing with each other
  30. 30. Vietnam Retail MarketA Positive Outlook Is on theHorizonThe retailing industry will experience a betteroutlook over the forecast period compared to thereview period. This is owing to the continuousurbanization as well as rising consumer livingstandards. Moreover, given the intensecompetitive environment, retailers will exploitmarketing and public relations activities togenerate growth as well as to strengthen theirbrand image. Modern grocery retailing channelsare likely to enjoy the most robust growth in theforecast period.
  31. 31. Vietnam Retail Market Index1. Retailing employment is increasing2. Income for sales person is quite low3. Not easy to find skilled employees
  32. 32. Vietnam Retail Market IndexSale volume of retail Y2010: 500K Billion VND equal to 24B USD while Store-based Retailingcontribute 99% of total market.Retail sale growth is 9.7% YoY while Non- Store Retailing has big growth 35.8% CAGR.
  33. 33. Storebase Vietnam Retail Market Index Grocery sale reach 228KB VND (nearly $11B), contribute 45% of total SBR. Non Grocery sale reach 271KB VND (nearly $13B), contribute 55% and grow with two digits 12.9% CAGR from 2005 to 2010, leading growth of SBR.
  34. 34. Vietnam RetailMarket IndexIn 2010 CE&Applicance 23KBVND over 1B USDand grow YoY14%, rank 3rd inCAGR.CE also contribute8.5% of total Non-Grocery retailvolume.
  35. 35. Vietnam Retail Market Index Mobile World, Nguyen Kim, Best Caring and FPT shop are the retail names that mentioned in report while Mobile World and Nguyen Kim had sale volume even bigger than shopping malls’ as Parkson and Diamond Plaza.
  36. 36. NonStore Vietnam Retail Market Index Non-store contribute big growth of retail market and all focus much into Direct Selling with turnover around 3.3KB VND (142M USD) and increase YoY 36%. Internet Retailing is still hidden number.
  37. 37. Vietnam Retail Market IndexAll of direct selling belong to foreign companies with cosmetic orhealthy, nutritious foods and account for nearly 50% of this market.
  38. 38. Forecast Vietnam Retail Market Index Retail market is estimated slow growth from 2010 to 2015 around 1.8% YoY and expected reach $26B in 2014 from $24B 2010 while Non Store show potential growth.
  39. 39. Vietnam Retail Market Index While Grocery market down and minus growth, Non Grocery stillincrease 3.6% YoY and help all market get more $2B covering dropt numer of Grocery during forecast time
  40. 40. Vietnam RetailMarket IndexDuring forecastperiod, CE&Appliance has thebiggest growthYoY with 7.8% ofNon Grocerymarket, Itcontribute morethan 10% of overall with more than$1.5B sale volumein 2015.
  41. 41. Vietnam Retail Market IndexNon-store still keep quick growth during forecast time with18.1% YoY and double in 2016 with nearly $362M while DirectSelling dominates this market.
  42. 42. Vietnam Retail Market IndexCash&Carry 1. Cash-and-carry still does not play an important role in the retail industry. At the end of the review period, there was only one player operating in this environment – Metro Cash & Carry by Metro AG 2. Cash-and-carry outlets offer diversified product portfolios, and target mostly small retailers or companies. The key purchasers in cash-and-carry are companies, restaurants and hotels, which usually purchase in large quantities. The core concept of cash-and-carry is wholesaling. Consequently, individual consumers are not encouraged in this channel 3. In 2010, cash-and-carry faced strong competition from other grocery channels such as supermarkets and hypermarkets. Earlier, Metro was considered the only place that could offer consumers a wide range of products at the cheapest price in a pleasant atmosphere. However, in the review period, players such as Big C and Co.opMart constantly tried to reduce their prices and enhance their shopping environment, which made them more directly competitive with Metro. As a result, although cash-and-carry still achieved growth over the review period, its performance was not as significant as other channels such as supermarkets and hypermarkets 4. By the end of 2010, there were 12 outlets of Metro Cash & Carry in Vietnam, located mostly in big cities and provinces, such as Ho Chi Minh City, Ha Noi, Can Tho, Hai Phong, Da Nang and Binh Duong. The company is expected to continue increasing its number of outlets over the forecast period 5. In the cash-and-carry environment in 2010, Metro Cash & Carry still enjoyed its monopoly position. Metro has been trying to provide its customers a wide range of products at the lowest prices, along with a high standard of service. This is achieved through professional management methodology, an efficient supply chain and well-trained staff
  43. 43. Vietnam Retail Market IndexEven be competed fiercely but Metro still keep high growth in2010 with 25% and revenue at nearly $500M, 12 outletscountry wide
  44. 44. Vietnam Retail Key Trends Internet Retail Local Products Private Label Shop Display Social Respons ibility
  45. 45. Vietnam Retail Key Trends Internet Retailing Still Negligible But Gaining PopularityFor online shopping, 2009 and 2010 were flourishing years, at least in terms of numberof websites. The most common ones were based on consumer-to-consumerplatforms, such as vatgia.com, rongbay.com and www.raovat.net. Although theywere initially set up for consumer-to-consumer transactions, many small- to medium-sized companies used them to set up virtual shops as a cheap way to advertise theirproducts to consumers. Besides these consumer-to-consumer platform websites, somebig companies also spent big budgets to revamp their websites to contain an onlineshopping section. The most notable examples were the electronics and appliancesspecialist retailers, one of which was Nguyen Kim Shopping Centre. Current impactThe rising number of online shopping websites definitely raised consumer awarenesstowards internet retailing. However, there were also many factors hindering thegrowth of this channel. Firstly, the underdeveloped consumer finance system andstrong habit of using cash still made many people hesitate from buying goods online.Secondly, many people still strongly preferred the ability to touch and feel theproducts before purchasing, in which online stores could not compete with physicalstores. And lastly, although the young generation was already very internetsavvy, young people were not the main spenders in a family, but rather theirparents, who were usually much less internet savvy and less open to the onlineshopping concept. Because of these reasons, internet retailing remained negligible in2010
  46. 46. Outlook Despite many factors negatively affecting internet retailing’s performance in 2010, it was undeniable that consumer awareness was rising rapidly thanks to the dynamic promotional activities of these retailers and the spreading word of mouth amongst the young population. As such, the channel is expected to see more dynamic activities and development over the forecast period as retailers try to attract consumers’ interest and capture the first phase of internet retailing development in the country. Having said this, the growth of internet retailing is still dependent on how fast the consumer finance industry develops, and whether consumers’ mindset regarding internet retailing becomes more open in the forecast period. . Future ImpactThere will be more new players in the field of internet retailing, thanks to the higher interest ofconsumers in this retailing channel. Some retailers in other retailing channels such assupermarkets/hypermarkets or bookstores might diversify their business into internet retailing tostrengthen their position in the retail industry. coIn the meantime, internet retailers might focus onexpanding their product portfolios to appeal to consumers’ attention and to educateconsumers to purchase over the internet. They will try to look for new products which haveunique characteristics or benefits. Therefore, consumers will have to purchase these productsfrom internet retailers, as they cannot find the same products in other retailing channels. As aresult, consumers will be familiar with internet retailing because they appreciate its benefits.Nevertheless, internet retailing will not pose a potential threat to other retailing channels such assupermarkets/hypermarkets, department stores or independent small grocers due to its smallsize. The faster growth of internet retailing will not cause consumers to shun store-based retailingbecause they will not change immediately their traditional habit of shopping at stores in theforecast years. Unless internet retailers improve the security of their websites, internet retailing willhave no chance to compete with other retailing channels..
  47. 47. Vietnam Retail Key Trends Private Label Driven by RetailersDuring the review period, private label only accounted for a very small share of value sales. Asprivate label was still a new concept amongst consumers, the number of private label productsremained small in both grocery and nongrocery retailing channels.However, towards the end of the review period, there were more private label products in themarket, especially in the supermarket and hypermarket channels, as these retailers started to usethem as a tool to differentiate themselves to attract consumers to visit their outlets. The Big Chypermarkets, owned by Casino Guichard- Perrachon SA, provided a good example. In 2010, BigC marketed several private label ranges, such as Wow! Gia Hap Dan, eBon, and Casino. Wow!Gia Hap Dan from Big C could be considered the most developed private label in the groceryretail industry, which covered products ranging from household care to packaged food. CasinoGuichard-Perrachon’s main competitor, Saigon Union of Trading Cooperatives, also launched itsown private label, Co.opMart, in 2009-2010. Although Co.opMart was not as developed as Big C’sprivate label products, it showed another development to the private label landscape of retailing Current impactNew private label products from Casino Guichard-Perrachon and Saigon Union of TradingCooperatives launched in 2009-2010 received generally good response from theconsumers, which showed that consumers accepted the lower prices despite the economyimage these brands portrayed. The key purchasers of private label products were low-incomeand middle-income consumers, as most private label products were positioned in the economysegment, except for some such as Casino Bio, which was a range of organic packaged foodproducts imported from Europe. Bakery by Big C and eBon, with products such as freshly bakedVietnamese baguettes and Vietnamese ham, were some examples of economy private labelproducts that were highly successful thanks to their good quality.
  48. 48. Vietnam Retail Key Trends OutlookOver the forecast period, private label is expected to grow even stronger than it was in 2009 and2010. Existing brands will see more expansion in terms of product categories thanks to theincreasing awareness of consumers towards private label products. After the success of theprivate label products of Casino Guichard-Perrachon and Saigon Union of TradingCooperatives, other retailers are also expected to follow and launch their own such products inthe forecast period.Private label will also see more development in terms of price and positioning. There is potential inboth the economy and premium segments, as they will target the different consumer trends.Economy brands will appeal to the bulk of consumers, who like to look for more value-for-moneyproducts, especially in categories where there is low brand loyalty like tissues and some packagedfood products. On the other hand, premium brands would tap the growing niche of the wealthyconsumers in the country. Future impactPrivate label will create another competition venue between the retailers, especially betweenthe major grocery retailers, such as Saigon Union of Trading Cooperatives, Hanoi Trade Corp, TCTGroup and Casino Guichard- Perrachon. Besides good prices, strong customer service andpleasant shopping environment, good private label products will also be a strong motivation forconsumers to choose a particular retailer instead of its competitors.In the long term, private label will also affect the retail landscape of Vietnam in terms ofcompetition and brands available in the market. As private label grows and become moreimportant, it will compete directly with other brands in the market, which will also be amotivation for the existing brands to develop themselves. However, as the value of private labelwas still very small in 2010, this is not expected to happen in the early forecast period.
  49. 49. Vietnam Retail Key Trends Local Products Get A Boost From the GovernmentTypically, consumers have a stereotype that foreign brands are better in quality than Vietnamesebrands. Thus, to change this mindset, the government launched the campaign “Vietnamese useVietnamese products” at the end of 2009, and extended it to the whole year of 2010. Besidesconstant media attention and advertising activities, a major activity of the campaign was thetrade exhibitions. These events, organised by the government bodies, moved across thecountry, from big cities like Ha Noi and Ho Chi Minh to small towns and rural areas to promoteand raise awareness of local products. Many local manufacturers participated in these tradeshows as they were a great opportunity for them to showcase their products on a wide scale.Many retailers also launched their own discounts and promotional programmes for local brandsto take advantage when these brands were in the limelight.. Current impact At the end of 2010, the government announced that the “Vietnamese use Vietnamese products” campaign was a success. Thanks to the campaign’s programme, consumers paid more attention to the local brands and products. The success of the campaign was reflected even more clearly in the major retailers, including supermarkets and hypermarkets. For instance, Big C hypermarkets reported that in 2010, local brands accounted for about 90% of the brands it offered, compared to just over 50% in 2009.
  50. 50. Outlook With the positive results, Vietnam’s government is predicted to continue carry on the “Vietnamese use Vietnamese products” campaign over the forecast period. The government will organise more trade fairs, so that local retailers and manufacturers can advertise their brands and expose their products to consumers. Through these events, consumers are able to witness the improvement and development of Vietnamese products. More importantly, they can compare product quality between local products and foreign products more easily to have better understanding of Vietnamese products. Furthermore, the government will provide financial assistance, such as lower interest rates or tax rates, to help local retailers and manufacturers to have additional budgets for their advertising and marketing activities as well as to encourage new local players to participate in the retail industry. Future ImpactAs a result of the “Vietnamese use Vietnamese products” campaign, local brands andproducts will continue to grow their presence in the country’s retailing landscape. Manyretailers will continue to give more promotions and discounts to local products to gain favourfrom the government and the consumers alike. Big retailers, such as Saigon Union of TradingCooperatives and Casino Guichard-Perrachon SA, will be the leaders of this trend.Local specialist retailers, such as Viet Tien Garment Co (VTEC), Phu Nhuan Jewelry JSC andViet Fashion Co Ltd, will also benefit from this trend, as they are some amongst the famouslocal companies that captured the consumers’ attention in 2010.
  51. 51. Vietnam Retail Key Trends Shopping Environment and ConvenienceIn 2010, the shopping environment became a focused topic for many retailers. As theconsumers, especially those in the urban areas, became more educated and moresophisticated, they also demanded better shopping environments, such as spacious aisles andattractive in-store displays. Increasingly busier lifestyles in big cities like Ha Noi and Ho Chi Minhalso introduced the need for retail therapy, as shopping became one of the ways for people torelax after a stressful day. Thus, places with better shopping environments would attract morecustomers than their competitors. Besides, as shopping centres also became new gatheringplaces for the teenagers and young population, those with nicer store designs and displaysattracted more customers as well.Convenience was also a focus in 2009-2010, as it also contributed to a better shoppingexperience. Many retailers, such as Saigon Union of Trading, offered free delivery service forcustomers who made a purchase of a minimum amount. This minimum amount was usuallylow, such as only VND200,000 required by Saigon Union of Trading, so that more customerscould leverage on the convenient delivery services and have less worry about the burden ofcarrying their groceries home..
  52. 52. Current impactThe year 2010 saw many efforts by retailers trying to give consumers a better shoppingenvironment to answer their need for a better place for shopping and gathering andto take advantage of the rising trend towards retail therapy. For instant, Big C, theleading hypermarket chain, replaced its usual in-store shopping basket with newbaskets that had wheels and extendable handles attached, so that shoppers coulddrag the baskets along instead of carrying them. The new baskets received goodfeedback, as consumers could use much less force and they could shop more withease. Besides, Big C also carried out several special events, such as the Fruit Festival in2010, when it decorated the stores lavishly to attract more customers.Many other retailers, such as Mobile World Co Ltd, also paid more attention to theirstore layout and design than before. Mobile World, especially, rearranged its storelayout for more additional space for customer service and more attractive andintuitive product arrangement. Thus, consumers felt more appreciated and relaxedwhen they shopped at these retail stores. OutlookAs consumers are expected to be more demanding and sophisticated, together withthe rise of middle- and high- income consumers, the trend towards improved shoppingexperience is expected to be carried forwards in the forecast period. Consumers willconstantly expect to receive better customer service, a nicer shopping environmentand more convenient and enjoyable ways to shop. Thus, the retailers will have toconstantly look to keep up with the trend and maintain themselves amongst consumers’favourite shopping destinations.
  53. 53. Future impactAs this trend is expected to continue growing in the forecast period, retailers willincorporate new strategies to give consumers better shopping places if they want togrow and achieve the leading positions. Training for front-line staff will probably beone of the focus areas for many retailers, as customer service largely affectsconsumers’ mood and their purchases. Big companies might have the advantage interms of financial capability to hire good training specialists, but small companies willalso have an advantage as they have fewer employees and thus the ability to trainthem more easily.Besides upgrading customer service standards, store design will also be looked at bymany retailers to enhance consumers’ shopping experience. All of these activities willincur costs, which will be passed down to the consumers. Thus, companies areexpected to be careful with how much they are willing to spend for these activities, asconsumers, no matter what, are still quite price conscious.
  54. 54. Vietnam Retail Key Trends Social Responsibility In 2008 and 2009, the scandal of Vedan (Vietnam) emitting its untreated product waste into the Thi Vai river in Dong Nai province, which caused serious damage to the environment and negatively affected hundreds of households living near the river, raised consumers’ concern for environmental issues. Consumers started to pay more attention to environmental problems, and many of them started to shift to purchase from manufacturers and retailers who showed their responsibility for nature. Besides the fact that consumers were becoming more educated and sophisticated, constant government educational programmes on saving the environment also helped to raise consumers’ awareness for environmental issues on a wide scale. Current impactRising consumer awareness for environmental issues urged the retailers to play their part to showtheir corporate social responsibility. This trend was started by the big retailers, especially in thegrocery channels. Following the Vedan (Vietnam) scandal, many supermarkets and hypermarketsstopped selling the manufacturer’s products to show that they did not support companies with badresponsibility for the environment. Some retailers, such as Big C, Co.opMart and Lotte Mart, alsoencouraged consumers to use recyclable bags instead of plastic bags by having in-store bannersand posters to explain how plastic bags negatively affected the environment. Some retailers evencarried out special programmes to show their care for the environment and to attract consumers’attention. For instance, Big C ran a campaign to collect people’s used batteries, and throughit, educated consumers the importance of disposing used batteries the correct way, which is lessharmful to the environment.It is difficult to measure how much these efforts helped the retailers with their sales and revenue, butthey definitely helped the retailers to obtain a positive image in the consumers’ minds.
  55. 55. OutlookOver the forecast period, retailing players will continue to increase their environmentalactivity thanks to their successful activities in 2010. Moreover, consumers are moreaware about the significant affects of the environment on their daily life when theglobal warming showed its detrimental consequences such as higher temperature orpollution. The higher number of environmental activities is also in line with the highernumber of corporate responsibility activities in manufacturing areas.Together with the environmental campaign executed by government offices, thecontribution of retailing players will enhance the attention of Vietnamese to Vietnam’senvironment. More importantly, the Vietnamese are also beginning to seeenvironmental protection as one of their responsibilities thanks to the effort of retailers. Future ImpactIn 2010, most of the environmental activities received good responses from consumers.Especially, most of the retailing players who showed their concern for the environmentgained a good reputation and image in consumers’ perception. As aresult, retailers, including nongrocery and grocery retailers, will expand their activity inenvironmental protection as the marketing tool to enhance their reputation and brandimage. More sophisticated activities are expected to take place in the forecastperiod, such as using more energy-saving appliances and encouraging people to usemore recyclable bags instead of plastic bags.
  56. 56. Key points to drive retail competition.Store Location Supplier Management ERP & CRMStore Management Customer Development
  57. 57. Store Location 1. Where to put my store??? 2. We need to understand areas well enoughTraffic: Traffic area, traffic roads, two ways road.Income Structure Area: Affluent householdarea, University area, Factory area…Population area: population size; male, femaleportion; young or old populationCompetition or group: Store number/ type densityMotorbike or car park: parking area for customers’vehiclesRental fee: that is one of high fee in operation costof retail shops.
  58. 58. What should be the best position for the store?
  59. 59. Store Location
  60. 60. Store Location
  61. 61. Store Location
  62. 62. Store Location
  63. 63. Store Location
  64. 64. Store Location
  65. 65. Store Location
  66. 66. Supplier Management1. How to make them quick delivery and give good price ???2. We need to understand suppliers well enough Loyalty: Factors and attributes that drives supplier loyalty and satisfaction Evaluation: How do they rank your store vs. competitors? Power negotiation: What are your strength & weaknesses vs. competitors??? Improvements: Key areas for improvement?
  67. 67. Supplier Management A decent understanding of your suppliers required • Power of Purchase Purchasin • Frequency of Purchase g Power • Ease of order request • Reliable/ Trust worthy. • Progressive. Image • Store Equity. • Pricing Strategy.• Openness/ Receptiveness• Work with me to improve Build my business Trade• Share market information• Is Proactive. relationsh A preferred ip• Category management. Supermarket• Self Management. • Clear& standard ordering process. • Ethics of purchaser. Order& • Payment Process. Payment • Payment abidance. • Retailer Promotion • Returned goods policy. • Trade support budget. • Responsiveness to problems • Sale/Merchandising Trading terms. MKT/Trad • Materials. e Support • Effective Advertising/ Promotions. • Speed of implementation
  68. 68. Store ManagementIn store management is not as simple as looks like Understand consumer channel choice Understand consumer behavior within MT channel Understand your store equity and competitors. Within Stores: • Understand gross category position. • Understand the consumer behavior by category – ranges and merchandizing
  69. 69. Store Management Understand consumer channel choice Tradition Shopping Chain stores Supermarket market mall Big stores 500-1000sqm Big stores 500-1000sqm base in shopping malls base in districts and sell full range of brand Many stores 100-200sqm provinces, sell full range products:Small, street IT shops and base in districts and of brand products: CE, appliances, mobile, IT,only focus into IT or provinces, sell focus into CE, appliances, mobile, IT, digitalmobile products Mobile, laptop. digital products… products, clothes, cosmeti
  70. 70. Store Management CE& Clothes, C Mobile IT customers Appliance osmetic, lu customers Customers xury Tradition High Low market MedChain stores ium High MedSupermarket Low ium High Med Low HighShopping mall ium
  71. 71. Store Management $9-10B&Volume& Gr: ???Market size $5B& CE Gr: 8%, Mo Gr: Shoppin 20%, Laptop Gr: g mall 11% Tablet Gr: 90%. Future trend Smart Ph Gr: 50% and now for Current trend luxury Super and now for market entry and middle income $1B& Gr Chain <10% Store Tradition Moving customers al market Low trend and have to change to nexts Growth& potential
  72. 72. Store ManagementGrowth Super Chain market Store Tradition al Shoppin market g mall Starting Peaking Maturing Changing
  73. 73. Store Management Shopping trip, shopping behaviors have been changing over timeRequirement for more choice range:• Income increase.• More product availability.• More new product awareness.Convenience still the key:• Near house or easy to get to.• One- stop shopping.• Car and motorbike park.Having experience with new model:• Ambience& atmosphere.• Product and service quality.• Clean and premium decoration.More family member during shopping trip:• Family entertainment cases.• Responsibility sharing for housewives.
  74. 74. Store Management Understand consumer behavior within MT channelIn- Store TV media needs to fit withinshopper experience• On average the customers shop the aisle for 36 secs, they don’t have time to take in a 30 sec ad• Even though shoppers noticed the TV showing ads placed above the aisle, very few actually watched• Consumers would be more open to ad messages when queuing at the check-out. Brief ad messages embedded in the display may be more effective in the aisle itself.
  75. 75. Store ManagementAnd sales assistants play an important role • .. 23% who shopped the aisle made contact with a sales assistant
  76. 76. Store ManagementUse baskets/trolleys encourages purchasing • .. one third of consumers who shopped the aisle did not use a trolley or basket • ..having an assistant offering baskets/trolleys means they shop for longer (average of 39 seconds with a basket vs 33 seconds with no basket/trolley) and buy more (average of 1.45 packs with a trolley vs 1.23 with none).
  77. 77. Store Management Understand your store equity and competitors. Awareness- 21% Consideration- 20% Store Accessibility-Resource 14% Efficiency, Loyalty Store Equity program- 12% Index Large store format& wide selection- 12% Quality products- 11% The Brand Equity model deconstructs the sources of store Pricing& VFM- 10% equity to understand its building blocks
  78. 78. Store ManagementLet’s see FMCG: Derived Importance Ranking of Supermarket Store Attributes - All ShoppersThe top 2 attributes driving SEI are related to location and convenience of finding items once instore, showing people do not want to waste any time when making a shopping trip
  79. 79. Store ManagementCompetition is fiercer among current playersCoop-mart still has a very strong SEI relative to its competitors in spite of a slight decline. Big Cequity rises significantly putting it slightly above Metro
  80. 80. Store Management Within Stores 2010 More Same Less Dont know Entertainment & dining out 22 49 28 0Home appliances (wash machines, Tv, hifi, etc) 22 55 23 1 What are the most important Household care products 22 61 16 1 categories???? Communication (telephone/fax/email) 24 55 21 1 • Personal equipment down Personla care product 25 59 16 0 demand from 6th in 2010 Pesonal equipment (mobile, laptop, etc) 27 51 21 1 to 10th in 2012. 29 59 12 0 Household utilities • Home appliances still Transportation 32 48 19 1 lowest demand in 2012 Helath care products/ services 34 53 12 1 But what the hottest products Food& beverages products 40 52 8 0 Education 57 34 8 1 or technology will led them 2012 growth??? More Same Less Source: TNSHome appliances (wash machines, Tv, hifi, etc) 12 62 26 Pesonal equipment (mobile, laptop, etc) 15 64 21 Entertainment & dining out 17 50 33 Communication (telephone/fax/email) 17 60 23 Transportation 21 64 15 Personla care product 23 61 17 Household care products 26 64 11 Household utilities 30 55 15 Food& beverages products 31 60 10 Helath care products/ services 35 58 7 Education 42 49 7
  81. 81. Store Management What are the most important categories????Functionsadded Growth
  82. 82. Store Management What are the most important categories???? Smartphone will lead growth of mobile phone market with many new designs and functions: camera, video recorder, music, movies…. Mobile market5 models 20 models 22 models 15 models
  83. 83. Store Management What are the most important categories????Working/ Entertain mentcreating Working Entertainment
  84. 84. Store Management What are the most important categories???? Tablet will be add growth of PC market when it make people comfortably with its entertainment functions. PC market3 models 1 model 4 models 6 models 1 model
  85. 85. Store Management What are the most important categories????Functionsadded Smart TV LCD/Plasma TV CRT TV Growth
  86. 86. Store Management
  87. 87. Store Management Within one category, what brands / items should be on your range?Which category contributes big sale volume and which one is addvalue???Big margin come from what category??? And which one is pricecompetition.How’s cycle life of each product/ brand??? And How’s demo timeof each product/ brand???How is display space cost/ product/brand???Which category or models of brand is the hottest one, greatgrowth??
  88. 88. Store ManagementStock management Sufficient stock level Under stock level Over stock level
  89. 89. Store Management Consumer Centric Simultaneous Merchandise Planning Financial planning, strategy and goal Optimized Assortment Clustering CDE Math model automatically creates localized assortment Space Clustering done at for every category/ planning category level based on cluster/POG/ Store customer buying patterns combination Merchandis e Planning Merchan Financial Real time simulations: dising objective New Merchant review and rules s product applies art Shelf and forecasti product ng dimensio ns Clusterin gIncremen tal CDE Decision treesCannibal ization Product attributes Store Loyalty handling Store and Supply restockin replenish chain g ment
  90. 90. Store ManagementSpace Planning by Planograms
  91. 91. Store Management How to optimize product selection and shelf merchandising at See the store level to put the right products in each store for your customersWhat you aremissing??? Manage the shelf more effectively to ensure that the right Act product assortment is appropriately merchandised to meet the needs and buying habits of consumers in a specific storeFaster with greaterconfidence Ensure appropriate space utilization, merchandising and stock Win levels so that customers leave the store satisfied and with your product in their shopping bag At the shelf
  92. 92. Customer DevelopmentWhat and when influence consumer decisions?
  93. 93. Customer DevelopmentPl’s see a research of Nielsen: Auto-pilot is a dominant trigger for store choice.Location is another driver. Promotions only play secondary roles in triggeringmore shoppers.
  94. 94. CustomerDevelopment
  95. 95. Customer Development inShould examine which shopping behavior is prevalentcategories? And see a research of Nielsen for FMCG:
  96. 96. CustomerDevelopment
  97. 97. ERP & CRM Human WEB Purchasin Suppliers g Sale Customers Shops Customers Services database Marketing & customer care Call Center Finance Ware house Potential Operation Loyalty In front Systemcustomers system Relationship
  98. 98. ERP & CRM Point of Purchasi sale Inventory ng Manage ment CreditManage ment Merchan ERP dising Marketin g& CRM Service& Repair Financial HRM& Accounti Payroll ng
  99. 99. ERP & CRMThe aim of marketing is to know and understand thecustomer so well that the product or service fits himand sells itself
  100. 100. ERP & CRMMobile and tablet Solution Mobile Solution
  101. 101. ERP & CRM Discount card Warranty cardTraining course Payment card Point accumulation Apps store card Value added card
  102. 102. Who are Players??? SOCIALIST REPUBLIC OF VIETNAM Capital: Hanoi Area: 331,210 km2 Hai Phong Population: >80M people Divided into 3 main regions – North – Central – South Da Nang 5 Cities (population) – Hanoi (6m) – Ho Chi Minh City (7m) – Hai Phong (1.8m) – Can Tho (1.2m) – Da Nang (0.8m) 58 Provinces Can Tho
  103. 103. Who are Players??? Strate Prod Reve CityNo Shops gy ucts nue SWOT Base 226, hu Price Laptop, mobil $150M in 2010 63 cities, while Strength: man competition e, CE and and estimate HCM big + Well known brand with mass staff: and mass appliances $300M in 2011 number with customers in Vietnam. 3,000 market with products. 51 (22.5% + ERP& CRM strong people mass chain Besides buy total number comparing with others. . store in nation and sell RFB shop) + Mass stores in nation wide wide. products, acc with 63 cities but most strong Plan to set up essories. in HCM. The Gioi Dien No private + Strong in mobile and laptop May with label market with competing price. department products. + Nice decoration and store of CE and convenience shop with appliances. motorbike parking. Set up + Strong in management CafeF, Apple human. shop but not + Strong investment by success then Mekong Cap. close. Weak: Mekong Cap + Cost operation is high. invest into + Low trained sale-man. Mobile World. + Risks from locations changing. + Loyal of customers is low and sensitive with price. + High cost but sell competing price is not long term especially bad economy now??? + Not strong in CE and department store
  104. 104. Who are Players??? Strate Prod Reve CityNo Shops gy ucts nue SWOT Base 43, hu Price Laptop, mobil $60-70M in 22 cities, while Strength: man competition e, accessories 2011 HCM big + Well known brand with staff: and mass products. number with customers in mobile market. 500 market with No private 16 (37% total + Mass stores in nation wide people mass chain label number shop) with 22 cities but most strong . store in nation products. in HCM. wide. + Strong in mobile and laptop Plan to set up market with competing price. and invest + Nice decoration and into S&T convenience shop with shops. motorbike parking Weak: + Cost operation is high. + Low trained sale-man. + Risks from locations changing. + Loyal of customers is low and sensitive with price. + High cost but sell competing price is not long term especially bad economy now??? + Low tech in ERP and CRM. + Weak management human. + Weak in Marketing operations
  105. 105. Who are Players??? Strate Prod Reve CityNo Shops gy ucts nue SWOT Base 10, hu Price Mobile and $10M-$15M in Just focus in Strength: man competition smart 2011 HCM city + Well known brand with staff: and focus phone, tablet customers in HCM mobile 400 into mobile , accessories market. people chain stores in products. + Strong in mobile and smart . HCM city. No private phone with competing price. label Weak: products. + Cost operation is high. + Low trained sale-man. + Risks from locations changing. + Loyal of customers is low and sensitive with price. + High cost but sell competing price is not long term especially bad economy now??? + Low tech in ERP and CRM. + Weak management human. + Weak in Marketing operations. + There are many claims about service and management inside: http://www.5giay.vn/chuyen-tro- mobile/1809621-phuoc-lap- mobile-phuc-vu-qua-te.html http://diendan.vienthonga.com/ tin-tuc-chung/bi-mat-chua- duoc-bat-mi-cua-phuoc-lap- mobile-21416.html
  106. 106. Who are Players??? Strate Prod Reve CityNo Shops gy ucts nue SWOT Base 23, hu Price Mobile, smart $33M in 2011 Mainly base Strength: man competition phone, tablet in 2 big cities: + Well known brand with staff: and focus and Hanoi and Ho customers with brand FPT in ICT 300 into laptop, acces Chi Minh with market. people mobile, lapto sories 11 stores. + Strong in investment by FPT with . p chain stores products. $12M. in nation Have private + Support by price, logistics and wide. label product products from FPT Trading group. Plan in 2014: call Fmobile. + Invest in ERP and CRM. 150 shops + Invest into high level manage and $200M. human. However, FPT Weak: failed quite + Cost operation is high. many times in + Low trained sale-man. previous + Risks from locations changing. years. + Loyal of customers is low and sensitive with price. + High cost but sell competing price is not long term especially bad economy now??? + Internal cooperation: too many layers and levels. + Set growth target too high with one – two shops per month while human and management system not yet set up and run well.
  107. 107. Who are Players??? Strate Prod Reve CityNo Shops gy ucts nue SWOT Base 5, hum Focus Mid Mobile, smart $5-6M in 2011 Mainly base Strength: an staff and high-end phone, tablet in Q1, Q3 in + Well known brand shop in under customers , luxury HCM, that luxury phones. 100 with luxury products and rich area. + Be the first shops invest much people phone, pen accessories into mid and high end segment. . and premium products. Also + Premium designed space. design. sell second Weak: hand + Service and not all products products. not equal to mid and high-end Have a customers. separate + Location base in rich District website of but location not base in traffic Luxury ones. road and not easy for packing. No private + Weak Management human label and family base. products. + Low ERP and CRM application. + No loyalty program for customers, that is very important with high-end system.
  108. 108. Who are Players??? Strate Prod Reve CityNo Shops gy ucts nue SWOT Base 134, hu Price Mobile $90-100M in Coverage full Strength: man competition phone, tablet 2011(estimate nation wide + Take advantage from Viettel staff and focus and ) with 64 operators registration shops more into laptop, digital provinces already set up in 64 provinces. than mobile, lapto camera, offic and cities. + Take advantages from logistic 1,500 p, tablet e, accessories and Telco networking database people chain stores in products. customers. nation wide. No private + Support price and margin from label Sim card to cover price of products. mobile phone… Weak: +High operation cost from human and coverage network in nation wide. + Low service and low trained sale staff. + Weak human management. + Low ERP and CRM management. + Ethics of import human.
  109. 109. Chain Store Map No Sho p S M H Quantity: Sale, No Shop cover margin: H H 1. Mass market. 2. Entry segment. 3. Price competition. 4. Low margin. 5. Big coverage. Cov Hum an M M erag eQuality: Add valueservice to cover highprice1. Niche market. S S2. Mid and High segment. S M H3. Service competition. Reve4. Loyalty. nue
  110. 110. Who are Players??? Strate Prod Reve CityNo Shops gy ucts nue SWOT Base 16, hu Focus into Mobile, lapto $400M in Coverage Strength: man supermarket p, tablet, CE 2011. Sothern area + Well brand in CE& appliances staff model with big and while 6 market. more building store appliances, d department + Build good service for than and coverage igital store base in customers and have separate 3000 full lines of products. HCM, 10 service centers. people products: No private remains in + Long year experience in retail. CE, appliances, label others cities + Own location by themselves. mobile, Digital. products. but only one + High trained staff. Build up image of in Hanoi. Weak: high service and +High operation cost from big quality brands. human and own property. Already + Weak human management. expanded to + Low ERP and CRM chain store but management. just have close. + Ethics of import human. + Not strong in North area. + Request high margin and not all suppliers can serve.
  111. 111. Who are Players???1. Brand by quantityof shop and coverage Noarea. Sho2. Balance risky from pbusiness in manyareas especially goahead to rural area. H M S H S Prod Cov ucts erag M M rang e e 1.Brand by service and product range. 2. Balance risky from S H business in many S M H kinds of products, brands. Reve nue
  112. 112. Thank You!