NTUC buying big into local retailing dream

Rapidly rising incomes in Vietnam flag remarkable retail potential in the country

The firm last week inked a joint venture agreement with Saigon Co-op to set up a chain of hypermarkets in the country, with the first store expected to open by 2012.

Under the deal, the joint venture will take Singapore’s homegrown brands to Vietnam and position FairPrice in one of the top emerging markets in Asia. Specific details on the joint venture are still being worked out with the information about the name of the new hypermarkets and their locations, number of hires and stores being not immediately revealed.

Ng Ser Miang, chairman of FairPrice, said: “‘FairPrice has been moderating the high cost of living in Singapore for the past 37 years and we are keen to share our experience with our friends in Vietnam. By diversifying Fairprice’s business, we will also be able to create a new income stream.”

“Saigon Co-op already has a strong customer base and is deeply rooted in the hearts of consumers in Vietnam,” he added.

The new partnership also widens the source of supply for FairPrice, giving customers in Singapore more choices. In Vietnam, Saigon Co-op will be able to better meet the growing needs of its customers by offering a wider range of food products, more competitive prices and greater accessibility.

FairPrice will contribute its expertise in the hypermarket-retail format to build and grow the chain of hypermarkets throughout Vietnam. The hypermarkets will retail a wide range of local products and suitable imported products, as well as FairPrice house brand products.

FairPrice and Saigon Co-op will also hold exchange programmes for their employees to facilitate knowledge transfer.

Nguyen Ngoc Hoa, chairman of Saigon Co-op, said: “FairPrice is the right fit for Saigon Co-op’s hypermart joint venture because both retailers are what we called ‘the people’s retailer’ and both ‘uphold the social mission for our people’.”

NTUC earlier explored overseas ventures in Myanmar and China but these did not succeed due to market conditions, according NTUC FairPrice Group CEO Tan Kian Chew.

Nextmall, the first hypermarket venture of FairPrice, closed in 2005 after incurring about $80 million in debts and over $40 million in losses over the three years since it was established, Tan said. The new joint venture with Saigon Co-op is expected to help make up for FairPrice’s failed China venture.

Some analysts said if Saigon Co-op was what FairPrice was 25 years ago, the deal would bode well for the local retailer as they could catch up with current and coming competition from foreign operators.

NTUC FairPrice Co-operative is a supermarket chain based in Singapore and is the largest in the country. The group has 100 supermarkets across the island, with over 50 outlets of Cheers convenience stores island-wide. NTUC FairPrice has partnered with ExxonMobil to run several stations with a FairPrice branding at the minimarts at their station.

As the largest retailer in Vietnam with a strong presence in Ho Chi Minh City, Saigon Co-op has been operating a chain of 49 Saigon Co.op Mart supermarkets in over 30 provinces and cities nationwide. The firm, which has been ranked among the Vietnam’s top favourite brands in 2010 by market research firm AC Nielsen Singapore, will this week open one more supermarket in central Quang Tri province.