Japan’s retailers reaching out to Vietnam’s market

FujiMart and AEON Mall are just some of the foreign retailers making waves in Vietnam (Photo: Duc Thanh)

Last week, Matsumoto Kiyoshi Holdings Group announced its official foray into Vietnam’s market by inking a deal with Lotus Food Group. The two will launch the first Matsumoto Kiyoshi flagship store in Vietnam at the end of March 2020, followed by 10 to 15 other stores in the next three to five years. From there, a network of hundreds of stores is planned, meeting the growing demand for healthcare and beauty services of millions of Vietnamese people.

According to Hiroki Miyaoka, CEO of Matsumoto Kiyoshi, the group has the ambition to become Vietnam’s leading drugstore and cosmetics chain. Vietnam is Matsumoto Kiyoshi’s third overseas market behind Taiwan and Thailand. The move is part of a broader strategy to push the company’s overseas expansion given that the Japanese market witnessed a continued slowdown.

“We started to analyse data of Vietnamese consumers shopping at the MatsuKiyo chain in Japan in 2017. The number of Vietnamese consumers there has skyrocketed over 150 per cent over the past two years. This, coupled with Vietnam’s expanding affluent class and growing appetite for Japanese products, prompts us to enter the Vietnamese market,” he added.

In the first phase, Matsumoto Kiyoshi will focus on cosmetics and functional food products. Besides Japanese brands, the chain will also promote both local and foreign products that are popular among Vietnamese consumers.

Matsumoto Kiyoshi is following in the footsteps of Japanese global apparel retailer UNIQLO, which launched its first store in Ho Chi Minh City on December 6. The flagship store features over 3,000 square metres of sales area on three floors, with a global assortment of clothing for men, women, and children.

Tadashi Yanai, founder and chairman UNIQLO, is excited about the outlook of the Vietnamese market, which will become the largest goods consumption centre in Southeast Asia. “The opening of our first store in Vietnam represents a truly important step in the global development and expansion of our company,” he said.

On December 5, AEON Mall organised the grand opening ceremony for its fifth mall in Vietnam, AEON Mall Ha Dong. Covering a total area of 150,000 square metres, it is the largest mall of the Japanese company so far. Having opened its first commercial centre in Vietnam in 2015, AEON Mall now aims to increase its portfolio to 20 outlets nationwide.

Meanwhile, FujiMart Vietnam stores are operated by FujiMart Vietnam Retail - a joint venture between Japan’s Sumitomo Corporation and local real estate conglomerate BRG Group.

Vietnam offers tremendous opportunities for Japanese retailers. In the last five years, the Vietnamese retail sector recorded a compound annual growth rate of nearly 11 per cent. Total revenue is also expected to reach $180 billion by the end of the year, which would represent an increase of 26.6 per cent from 2018. With the influx of investments into the sector, it is poised to witness further growth in the near future, according to a recent report by advisory firm Deloitte.

However, Japanese retailers are facing tough competition not only from local retailers but also South Korean brands. South Korean conglomerate Lotte Mart has expanded its retail footprint in Vietnam with supermarket chains, department stores, e-commerce, and even duty-free stores. As the first South Korean retailer to enter Vietnam in 2008, it has so far opened 14 Lotte Mart supermarkets across Vietnam and one department store in Hanoi.

Likewise, South Korean retail giant E-mart recorded a healthy performance following its local debut in Vietnam in late 2015. With the aim of becoming the number-one hypermarket, E-mart is planning to open another outlet in Ho Chi Minh City next year.

Meanwhile, GS Retail, South Korea's biggest convenience store franchise, inked a deal with local SonKim Group to establish a joint venture running the convenience store brand GS25. The chain has so far opened 54 convenience stores in the country with a view to reach 2,500 GS25 outlets in the country within the next 10 years.

Most recently, Vietnam’s leading private conglemorate Vingroup announced that it will withdraw from its retail business to focus on its core strategy as an industrial and tech company. The group will merge its e-commerce site Adayroi with e-payment unit VinID, and wind up its electronics retailing business VinPro. The news comes two weeks after the merger of its supermarket chains and agribusiness with Masan Group.

Commenting on the Vingroup-Masan merger, Ben Gray, director of Capital Markets at Cushman & Wakefield, said, “This new platform is exceptional in its scale and reach in the market: 2,600 supermarkets and convenience stores in 50 cities and provinces, and 14 eco-farms. This now gives Masan Group, as part of the fast-moving consumer goods ecosystem, greater reach for its products, maximising the benefit from Vingroup’s investment into the retail space.”

Gray added that it is an excellent example of a strategic merger of two goliaths of the market. “Both have had clear lines of sight and a robust strategy to keep ahead of the structural changes in how consumers are maturing in the market, seeking greater convenience and quality, out their favourite branded products,” he said.