Retailers implement creative quick fixes to drum up custom

New options for safe shopping are being mooted by some companies, Photo: Le Toan

Arriving at Lotte Dao Tan supermarket in Hanoi at 6pm, the time when many people drop by supermarkets on their way home from work to buy food for dinner, little custom could be observed, with almost no customers ambling along the aisles.

Linh Hoa, a staff member at Lotte Dao Tan, told VIR that customers are almost exclusively residents of the apartment building where the store is located. Previously, Lotte had been a favoured shopping destination for tourists, especially from South Korea, with 50 per cent of its revenue coming from this customer group. However, since the pandemic broke out, both footfall and purchases have plunged.

“The staff members have not heard of plans to cut salary or bonuses, or letting anybody go, but the company has encouraged us to take turns and have a few days of unpaid leave,” Hoa said.

At Big C Garden, also in Hanoi, while shoppers seemed more numerous than at Lotte Dao Tan, almost all customers focused on fresh vegetables, fruit, and meat.

From last week, Vietnam began closing all shops and facilities of non-essential services in five big cities nationwide from March 28, when the number of confirmed coronavirus cases reached 169, until April 15.

A drop in demand

Ho Chi Minh City People’s Committee has submitted a proposal to the prime minister to help businesses through the current difficult times, with emergency policies for businesses working in the services, tourism, and agricultural sectors, as well as small- and medium-sized enterprises.

Accordingly, businesses impacted by the pandemic would be either exempted or get a reduction of land rent, as well as be given access to numerous tax incentives.

Ly Kim Chi, chairwoman of the Food and Foodstuff Association of Ho Chi Minh City, told local media that these proposals were built based on the opinions of businesses located in the city, operating across all business sectors.

Saigon Co.op, one of Vietnam’s leading retailers, has managed to weather difficulties. At a meeting organised in late February, a representative of Saigon Co.op affirmed that the retail market this year is forecast to face massive difficulties due to the epidemic. However, the company still set revenue target of VND38.9 trillion ($1.69 billion), up 10 per cent on-year.

The surge of people to supermarkets to stockpile goods for a potential crisis after the 17th COVID-19 patient was discovered on March 6 likely reinforced Saigon Co.op’s expectations. However, only a few days afterwards, the retailer was already on the list of businesses in need of help.

The difficulties of this retailer come from a drop in purchases while labour and logistics expenses show no signs of decline. The difficulties double because it has to increase stock in its warehouses in anticipation for a potential turn for the worse in the epidemic situation.

At the meeting with Minister of Industry and Trade Tran Tuan Anh on March 7, a representative of the Co.op Food supermarket chain – part of Saigon Co.op – said that the chain’s total stock is worth over VND100 billion ($4.35 million). It also transports goods to its warehouses in the Central Highlands city of Dalat, Ho Chi Minh City, and the northern province of Bac Ninh to supply for Hanoi.

Also at this meeting, Vinmart reported that its stock increased by 40 times and Big C’s was 30-40 per cent higher than normal.

The issues reported by Saigon Co.op and Lotte Dao Tan mirror general difficulties felt by all supermarket chains in Vietnam – the goods on the shelves and in the warehouses are hard to sell while consumers are reluctant to leave the safety of their homes and are avoiding crowded places. The difficulties are forecast to be prolonged as the authorities order a growing number of public entertainment venues to temporarily close to contain the spread of the pandemic.

Coping with obstacles

Looking at empty aisles and fully stocked shelves, some supermarkets have begun accelerating recruitment for online business and delivery. Specifically, Big C Garden and Big C Thang Long are on the market for shippers and has been steadily hiring for almost a month now. K-Market in Hanoi’s Hoan Kiem district has also been hiring shippers for several months.

Meanwhile, Lotte Mart is adopting an open mind about cutting working hours for its personnel. A staff member of the company’s Ba Dinh district branch told VIR that since the pandemic broke out, the supermarket has been encouraging employees to go on unpaid leave.

Notably, in contrast with other supermarkets, Lotte Mart does not seem hot on online retail, probably after its initial failed attempt in 2016, forcing it to close its Lotte.vn platform early this year. Now the retailer only sells a few products like toothpaste or food containers on its website.

As tourists have been contributing a major share of its performance, travel restrictions and the general call for self-isolation have been bad for business – however, the South Korean giant seems to be still smarting from its previous failure as it is only considering cutting personnel or working hours.

On the other hand, life cannot and will not stop – as consumers are forced into isolation, new options for safe shopping arise. Ride-hailing applications Grab and Be have both introduced new services to help customers buy grocery from supermarkets. They have partnered up with several retail chains and convenience store chains and remain open to further partnerships.

A representative of Grab said that the launch of the new service aims to create an added shopping option for customers as the pandemic keeps spreading. It is also in line with local authorities’ directions of encouraging people to shop online during these times.

So far, fewer than 10 stores and supermarkets have entered into co-operation with GrabMart (Grab’s new service), but the Singaporean company expects the number to rise soon.

The GrabMart and Be model is not entirely new to Vietnam, as local firms like Chopp.vn, Disieuthi.vn, and Now – one of the biggest competitors of GrabFood in the local market – have been offering this service for years.

GoViet’s parent company, Gojek, has launched a similar service named Gomart in its Indonesian system. If the outbreak grows more serious, GoViet may also add the Gomart feature.

According to market research company Nielsen’s latest survey, in Hanoi, Ho Chi Minh City, and the central city of Danang, over 50 per cent of consumers go to supermarkets and convenience stores less to directly purchase goods.Moreover, 60 per cent of consumers have also been going to wet markets less frequently, with all of them turning towards e-commerce as a viable alternative.

As people are reluctant to leave their homes during the health crisis, physical supermarkets like Big C and Lotte Mart could partner up with these firms to bolster their online capabilities and presence. Indeed, working with more applications will bring more grist to the retail chains.

With a supermarket targeting tourists like Lotte Mart, co-operating with these apps to access a larger consumer base may be a good solution to improve its performance now – and even after the COVID-19 pandemic.