Trinh Duc Tuan
Picomall last week opened in Hanoi amid rising inflation and tightened consumer spending. Trinh Duc Tuan, deputy director of mall developer Pico Joint Stock Company, talks to VIR’s Thanh Thuy about how the mall will tap the retail market’s potential.
How are current economic problems such as high inflation and interest rates and lower consumer spending posing challenges to the mall in attracting tenants?
Vietnam’s economy faces many difficulties, thus it is not easy for tenants to expand their business and chains.
However, Picomall still follows its business orientation that focuses on strong and good brands and tenants. We are confident that the mall’s strategic location in a densely populated area of Hanoi, the small supply of retail space and the big growth potential of Vietnam’s retail market will attract new tenants and brands to Picomall.
Owned by Pico, a famous digital brand with much experience in retail management, Picomall will grab customers’ attention. In addition, with a large retail area, Picomall can mix many entertainment and relax functions within the centre such as food and beverage, game zones, a sport centre, spas and much more.
Is the occupancy rate of the mall meeting your expectations?
About 86 per cent of retail space in Picomall is occupied with 40 per cent of the total operating area earmarked for food and beverage and entertainment, 31 per cent for fashion and accessories, 12 per cent for furniture, bedding and kitchen wear, 9 per cent for Pico Digital and 8 per cent for a supermarket. Rents at the mall range from $26 to $100 per square metre, per month, including service charges.
What lessons have you learnt from the failure of Hanoi’s Grand Plaza and Trang Tien Plaza in attracting tenants and shoppers, and how will you compete with other malls in the area such as Parkson and soon-to-arrive Royal City?
We focus on strong varied tenants mix with a mixture of anchor tenants, sub anchors and specialty stores. We also have a strong mix of entertainment, food and beverage and specialty shops. Our quality management and regular marketing will ensure return customers. Picomall is community-based that ensures a whole local community shops at the mall because they have a sense that it is their place. It also has a strong family positioning that ensures that kids encourage their parents to take them to Picomall.
Picomall will not be competing with Parkson, but complementing and making the area a shopping district. Royal City will be competition, but by the time it opens Picomall will have cemented its position as market leader in mid-size malls and Royal City is a huge underground mall.
Why did Pico choose Hanoi to open a shopping mall when Ho Chi Minh City is considered a better location for retail development?
Opening a new commercial centre requires a lot of factors such as a large area in a good location, human resources and experiences. Pico’s head office is located in Hanoi and it is easier for us to address these factors. We opened a shopping mall in Hanoi first and plan another new commercial centre in Ho Chi Minh City after. As scheduled, in the second quarter of 2012, Pico’s 40,000sqm new commercial centre will be opened at No.20, Cong Hoa street, Ho Chi Minh City.
It has been said for a long time that Vietnam has great potential for retailing. However, as you may know, many famous international food and beverage or fashion brands are still absent from Vietnam. Why?
There are many barriers to entry of international retailers into Vietnam such as the economic needs test, few suitable local partners and few good locations available. Food and beverage and chain stores need lots of shops in good locations and they need to trust that their brand will be well taken care of. Rentals in central business district are also relatively high for large stores, which is also an obstacle for retailers to expand business in Vietnam.
Has Picomall managed to attract any new retail brands?
Picomall has attracted some new brands to Hanoi such as franchised Thailand-backed Lynn Around and Poland-backed Big Star fashion stores, American cosmetic firm NYX and Korean-backed Caticlair and Crocs shoes and sandals from the United States. Some brands expand their business from Ho Chi Minh City to Hanoi such as Coffee Bean.