Local retailers meet foreign challenge

For example, Tran Anh Digital World JSC’s 2013 market expansion plan envisages hiking its supermarkets with IT items from four to eight in Hanoi’s key areas, of which the eighth supermarket Tran Anh Hoang Mai is slated for inauguration in 2013’s fourth quarter.

In the future, Tran Anh could increase visibility not only in Hanoi, but also in other big cities, according to company’s chairman Tran Xuan Kien.

In 2012, Tran Anh launched two new supermarkets, which were seen as the main cause behind the firm’s declined profits last year. It was similar to when it turned four small shops into two big supermarkets in 2007.
By that time, the revenue generated by two supermarkets did not increase compared to that of the four small shops, but their operating costs were three to four-fold higher.

“Declined revenue was just momentary and we were on our chosen path. The dividend was when the supermarket model arrived, we have reaped rewards, as today businesses with IT retail shops are facing going bankrupt.  Not all firms dare to expand scope in difficulties, since it is risky, but it also entails opportunities for making breakthroughs,” Kien noted.

An important part in local retail firms’ decision on scope expansion is space leasing rate which has reduced remarkably thus far.
“Retail space rental fees in Hanoi and Ho Chi Minh City are not much different. The rate is about $10-12/sq.m/month for decent space for trading,” Kien said.

Deputy general director of fashion store Vinatexmart, under Vinatex, Tran Thanh Nhan agreed current space rental was more affordable than several years ago.

Vinatexmart is now visible in 13 provinces and municipalities nationwide with 82 fashion shops, including 13 shops in Ho Chi Minh City.
By 2015, the system is expected to accommodate around 200 fashion stores throughout the country, with 20 new venues alones in 2013.

However, not all retail firms found it easy for leasing or buying space at competitive rates. The Maximark supermarket chain of Ho Chi Minh City-based An Phong Investment JSC is an example.

The business currently operates five Maximark venues and set to open two new ones this year, one in Dong Nai province’s Bien Hoa city and the other in Ho Chi Minh City’s Go Vap district. It is now in legal setup stage which will soon be completed.

“Due to difficulties in finding new space at reasonable costs, we probably have to open minimarts [DainyMaxi], but have yet to source suitable leasing space,” said a company source.