Mum and baby market gains breadth and depth

The mum and baby market is now a swirl of colours and cute designs, with far better quality

In a mum and baby supermarket in Hanoi’s Ba Dinh district, eight months pregnant Dao Thanh Tu, was picking her way through the thousands of items for mothers and babies to find the very best to welcome her baby next month.

Overwhelmed by the kaleidoscope of colours and designs of imported goods, Tu told VIR, “There has been far more choice in the market than when I gave birth to my first child in 2010. With all of these cute items, I just can’t decide.”

Back in 2010, there were far fewer supermarkets, and mums and pregnant women like Tu could only choose from a handful of private retail stores, where the products were not so plentiful and the quality was not so high.

Over the last several years, the appearance and development of large-scale mum and baby retailers have changed the face of the market. Currently, it is very easy to find a mum and baby supermarket offering different brands only a couple of streets away.

As the country with the highest proportion of young families in Southeast Asia with 12 per cent of households having babies under one year of age, and 20 per cent having babies aged one to two, Vietnam has been highlighted as a promising market for companies supplying services and products related to mother and baby care.

The total revenue of this market is estimated at around $7 billion, with the growth rate of 30-40 per cent, as cited by CEO of Bibo Mart Trinh Lan Phuong. Especially, consumer shopping habits have been shifting from traditional models like markets and supermarkets to well-known store chains specialising in the needs of mothers and babies.

Heavy competition

The strong growth of the mother and baby market in recent years has been drawing in foreign investors, with the latest entrant being Mothercare from the UK.

Entering Vietnam in last April, Mothercare has successfully opened five stores in Crescent Mall, Vincom Landmark 81, Vincom Center Nguyen Chi Thanh, Estella Place, The Garden Shopping Center, with the same scale as its 355 square metre flagship store in B2 Vincom Centre Dong Khoi.

In a franchising partnership with Au Chau Fashion and Cosmetics Co., Ltd. (ACFC), a subsidiary of Imex Pan Pacific Group (IPP Group), Mothercare plans to launch several stores in 2019 in the two big cities of Hanoi and Ho Chi Minh City.

Vo Thi Phi Phuong, CEO of ACFC, said that there is immense demand for quality products in the high-end segment for hygiene, nutrition, and educational toys for babies from birth to around five years of age. “Especially, they need high-quality services,” said Phuong.

That is why Mothercare has set supplying UK-standard products to meet all demands of mothers-to-be and children in the first five years as its new global strategy.

“We will focus on supplying creative and unique products of the highest quality for children below five in Vietnam, too,” confirmed Mothercare’s representative.

Despite Mothercare’s efforts, the market remains firmly in the hands of Bibo Mart, which is 20 per cent owned by ACA Investments, Japan’s leading fund management company and an affiliate of Sumitomo Corporation.

Starting out with only two stores in 2006, Bibo Mart had 141 stores at the end of 2018. While falling short of the 180 store target set by the end of 2018, the company is still shooting for having 500 across the country by the end of 2019.

On average, about 10 new stores will open nationwide each month. Bibo Mart stores will be located in more than 18 cities and provinces, targeting locations that are densely populated and convenient for buyers. Over its 12 years of establishment and development, Bibo Mart is now the No.1 mum and baby chain in Vietnam and is valued at $140 million.

Launched three years after Bibo Mart, Kids Plaza has opened 72 stores across the country, and is the main rival of Bibo Mart at the moment. Additionally, other retailers like Con Cung, Shoptretho, TutiCare, and Soc&Brothers are also large players in the market.

Do Van Tuan, CEO of Kids Plaza, said, “The appearance of foreign brands in Vietnam demonstrates that the market is big enough to draw foreign attention. Beginning as parallel imports, foreign products are now officially imported and show up in increasing numbers in store chains in the country. This means consumption demand is increasing.”

Transforming competition

In general, Mothercare is not a direct competitor to other local mum and baby retail store chains because they occupy largely different segments.

According to Tuan of Kids Plaza, Mothercare stores focus on shopping centres, and their product line-up is mostly “Made in China” products with high-quality and high selling price. Besides, they do not sell diapers and milk products.

Explaining its focus on products in the mid and high-end segment, Phuong of ACFC, said that the mum and baby market is very competitive, however, there is a marked lack of products in the mid and high-end segment, which are high-quality, safe, and clear of origin.

“Almost none of the existing mum and baby retail stores meet the demand in these segments, forcing customers to either order from abroad or go to shop abroad,” Phuong said.

Phuong believed that with 50 years of experience and having large distribution systems in Hong Kong and Singapore, Mothercare will reach success in Vietnam. Besides, Mothercare may change its business strategy in order to better fit Vietnamese customers’ demands. Notably, along with opening stores in shopping centres, they will open stores on large streets.

A highlight in Mothercare’s business strategy is the opening of the flagship store in Ho Chi Minh City recently. This move is expected to create a breakthrough in revenue for the company because a flagship store is an excellent way for a strong brand to establish a presence in a new market and to make an immediate statement. Its presence – even the announcement of its intended presence – shows confidence, commitment, and showmanship.

Covering an area of 2,800sq,m on a central street, Mothercare’s flagship store is the cornerstone of its business strategy in Vietnam. Along with the diversity of products, the flagship store also has a relaxation area as well as other functional areas to keep customers in the store as long as possible.

However, along with mapping out the exact demand of customers, combining the online and offline business methods goes a long way to ensuring the success of businesses because in the context of the Fourth Industrial Revolution, e-commerce platforms are one of the most effective sales channels. Mothercare and other local mum and baby retail stores are not an exception.

In Mothercare’s case, 41 per cent of the company’s global sales revenue comes from selling products on e-commerce platforms, with 83 per cent of these sales transactions being conducted via smartphones. In the fiscal year 2017, Mothercare reported an increase of 7.8 per cent in sales revenue to £172 million ($224.7 million). The company will soon implement online sales in Vietnam, along with expanding its offline store chain.

On the other hand, local mum and baby product retailers are also keen on joining the e-commerce playground. According to Phuong of Bibo Mart, the revenue from trading on e-commerce platforms currently makes up 14.5 per cent of the company’s total revenue, and the figure is expected to increase to 30 per cent in the next five years. Besides, Bibo Mart will also hire foreign advisors to build a digital business strategy for the 2018-2023 period.

“The retailers who own modern technology platforms, have a deep understanding of the market, and put the benefit of customers ahead will succeed,” said Phuong.

Returning to Dao Thanh Tu, she told VIR that at the moment, she has a lot of time to go shopping for herself and the baby, but after the baby becomes six months old, she will have to return to work and she will have to order products online.