Modern retail - a pleasing experience

December 05, 2020 | 11:39
With a market size of more than $60 billion and double-digit growth each year, Vietnam’s retail industry continues to heat up the race between domestic and foreign investors. However, instead of just aiming for increased revenue and profits, the key to conquering the country’s rising retail sector may lie in winning over the hearts of consumers with quality and commitment.
modern retail a pleasing experience
Modern retail A pleasing experience

After entering the parking lot on Le Duan street in Hanoi, Nguyen Van Hoa’s family went into one of their favourite destinations – the FujiMart supermarket. The children and the father went ahead to pick up cosmetics, drinks, pasta, and spices from the second floor, while their mother was busy choosing fresh food, vegetables, and fruits on the first floor.

For Hoa’s family, visiting the supermarket together has become one of their favourite habits and is more than just a quick run for groceries and supplies. For instance, the parents use the opportunity to teach their children about the value of money and how to spend it wisely – an important life skill that many city children seem to lack nowadays. Hoa’s wife is also happy that she no longer needs to go alone to buy groceries. This way, she feels that the whole family shares part of the tedious housework.

Though this FujiMart is located more than 5 kilometres from their home, the family chose this particular supermarket on Le Duan street over other modern retailers after Hoa’s sister-in-law recommended it for its freshness and plentiful variety of goods at affordable prices.

Aiming for expansion

Seeing families enjoy the shopping experience at FujiMart to this degree is what inspired BRG Group and Sumitomo Corporation to continue pursuing their strategy of expanding retail investments in Vietnam. After nearly two years of observing and researching the market, in August this year, the second FujiMart opened its doors on Hoang Cau street in Hanoi. Along with Sumitomo, many other Japanese investors are infatuated with the Vietnamese retail sector.

Tetsuo Konaka, former chief representative of the Japan International Cooperation Agency, commented, “Vietnam’s large market with a population of around 96 million people, a rapidly growing middle class, and the ability to pay for good quality goods, has created a great attraction among foreign investors.”

According to Economist Intelligence Unit, the proportion of households earning more than $10,000 per year has increased from 12 per cent in 2016 to 17 per cent in 2021. In addition, Vietnam’s middle class is among the fasting-growing ones in the Asia-Pacific, more than 50 per cent of the population is of working age, and more than 40 per cent is under 24 years old – it is this golden population, coupled with the rapid growth of the middle class, that creates the demand for basic and high-end retail goods.

Nevertheless, not just young people are important for the consumption demand of an economy, the elderly will also continue to be a driving force for the retail industry. In 2000, the number of people aged over 60 years was only about 6.9 million, but by 2015, it increased to 9.6 million and is expected to increase to 12.3 million by the end of 2020, thereby accounting for 12.5 per cent of the population. Furthermore, the continuously lengthening life expectancy increases the need for healthier and more useful life-enhancing items.

According to global management consulting firm Kearney, Vietnam is now one of the 30 most-attractive retail markets in the world on the Global Retail Development Index. Meanwhile, the World Bank forecast that household spending in Vietnam will increase by 10.5 per cent per year on average.

modern retail a pleasing experience
Modern retail: a pleasing experience--illustration photo. Photo: Shutterstock

Seeking loyalty

When looking for possible new locations, most enterprises in the retail industry have similar selection criteria, such as the population, traffic, wealth level, and so on. However, the race to find and select beautiful premises is only one of the priorities of large corporations like Sumitomo.

One of FujiMart’s unique selling points is its know-how and operating technology, especially in ensuring the freshness and taste of its Japanese style food, offered with dedicated customer service. When these requirements are not met, Sumitomo is in no hurry to open a new supermarket, even if there is a preeminent location.

Keisuke Hitotsumatsu, general director of FujiMart Vietnam, explained, “FujiMart took nearly two years to study the market and then decided to open its second supermarket.”

The new FujiMart has a total area of more than 1,000 square metres, filled with about 10,000 different consumer goods conveniently displayed on the same floor.

“Under our slogan ‘Fresh Everyday’, our products are delivered to FujiMart every day, always ensuring the freshness and quality of products,” Keisuke said.

For a long time, sales were the only measure of success for a supermarket, and price, quality, variety, and convenience are still often considered the four factors driving the success of retail chains. However, with more than 20 years of experience in the retail industry, Keisuke warns that in addition to the growth in numbers, retailers will have to make an impression on customers and gain their loyalty.

This view is also shared by BRG Group, one of the leading retailers in Vietnam. Since the beginning of April, BRG has been opening dozens of new BRGMart stores in central locations across Hanoi, to reach 100 stores by the end of 2020. According to the group, all BRGMarts are committed to providing a stable supply of quality goods at fair prices. Meanwhile, with the second Fujimart, BRG also implements a series of promotions for direct imports like US pork, chicken, and beef, which will be delivered to Vietnamese consumers through the group’s logistics and supermarket system.

As a further vision, both companies involved in FujiMart plan to set up several additional retail channels, as soon as the existing stores have attracted a large number of customers and the brand has become familiar.

By Hoang Viet

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional