Buying into the retail dream

Saigon Co.op chairman Nguyen Ngoc Hoa said there was one-sided domestic market competition between local retailers and wealthy foreign players.

“Vietnamese retailers just came into being 15-20 years ago, whereas foreign players have much experience with a global network and deep pockets,” said Hoa.

“We wish to open mega malls in big cities like Hanoi and Ho Chi Minh City. But the money put into procuring land plots alone causes us serious headaches,” Hoa said, adding Ho Chi Minh City authorities just recommended Saigon Co.op a space covering 3,000-4,000 square metres in a densely populated are, but it cost almost VND600 billion ($28.5 million).

Leasing space is another concern for local retailers, as many localities wanted a one-off payment from space earmarked for supermarket development.

Besides, many ‘good places’ for mall development have fallen into the hands of well-off foreign players.

“We once came to a locality asking to open a supermarket in a specific location. That locality was indifferent to our proposal. However, some time later I saw a supermarket ran by a foreign player in the same location,” said general manager Hoang Hong Hanh at Vietnam Intimex Joint Stock Corporation, operator of the Intimex supermarket chain.

Current high lending rates also hurt firms. “We would like the State Bank to offer us a credit package of around VND1 trillion ($47.6 million) with reasonable interest rates in three years to enable business expansion plans,” said Hanh.

Chairman Nguyen Huu Thang of Hanoi Trade Corporation - operator of Hapro mart chain, said his business got little from state-run trade promotion programmes.

“Our supermarket was opened in 2004 with buoyant business figures initially of around VND300 million ($14,000) sales revenue per day. However, we saw revenue sliding 30 per cent daily after Big C supermarket came into existence two kilometres from us,” said a supermarket owner.

According to the General Statistics Office, Vietnam’s total retail sales revenue amounted to VND186.4 trillion ($8.87 billion) in February 2012, down 2.4 per cent against the previous month.

Generally, total sales revenue from goods and services came to around VND380.2 trillion ($18.1 billion) in the first two months of 2012, a 22 per cent jump on-year