Retailers racing to seek business premises
 
VietNamNet Bridge – Vietnam will not have to open its market to foreign retailers until early next year but the race to seek business premises among retailers is already heating up.

Hunting for good positions

Wellcome stores of Giant South Asia Investments Pte

Located at No 60A Truong Son Road in Tan Binh district, the newly opened trade centre proves to have a strategic position as it is near Tan Son Nhat international airport, and so can easily attract domestic and foreign travellers. 

Like the other four trade centres in HCM City, Hanoi and Hai Phong, the fifth centre occupies the five highest floors of a 10-storey building owned by CT group, and targets customers with medium and high incomes.

Tham Tuck Choy, General Director of Parkson Vietnam, said that the number of Parkson centres will not stay at five for long as more will be opened in HCM City, Hanoi and other big cities in order to take full advantage of the potential retail market in Vietnam.

Meanwhile, France’s Casino Group, which has received its first operation licence in the retail sector, has opened a new shopping centre at Big C Dong Nai.

The new centre is located in the Vung Tau triangle, and aims to meet the increasingly high demand for shopping of local residents and tourists in Vung Tau.

Casino is moving ahead with its plan to open a fourth supermart in HCM City, and 8th supermart nationwide. The fourth supermart will be situated on Nguyen Kiem street in Go Vap district, a good position in the eyes of the retail circle.

It is clear that Casino, since setting foot in Vietnam’s market, has been striving to develop retail centres in the gateway areas of the city.

The German retailer Metro Cash & Carry has also been trying to develop its distribution network in Vietnam. In the last five years, since it appeared in the country, it has put into operation big trade centres in HCM City, Hanoi, Can Tho, Da Nang and Hai Phong.

Operational retailers well understand that business premises play a very important role in the success of their operations. Therefore, they have been racing to seek advantageous positions for shopping centres before other giants in the world, like Wal-Mart, Tesco, and Carrefour, jump into the market.

Chairman of Saigon Co-op chain Nguyen Ngoc Hoa said that Vietnam still has not fully opened its doors to foreign retailers, but domestic retailers have had to compete with foreign retailers in the last three years in choosing business premises.

“Foreign investors are ready to pay high sums of money to hire good positions for shopping centres, while domestic investors are not able to due to financial capability problems,” Hoa said.

Squeezing into Vietnam’s market

Vietnam is considered an attractive market for foreign investors thanks to the increasingly high purchasing power. A.T Kearney, a US consultancy firm, has released a surprising survey, which ranked Vietnam as No 1 on the list of attractive emerging markets in the world in 2008. That explains why many retailers have been trying to set foot in Vietnam sooner than the market opening timetable.

Nguyen Thi Anh Hoa, General Director of Dong Hung Company, which owns Citimart chain, related that she was shocked when last year she received a lot of calls from domestic and foreign suppliers who said that they feared the Citimart chain would not exist any longer.

At that time, Singapore-based Gian South Asia Investment Pte got an operation licence and planned to open trade centres in the locations where there were Citimart shops.

Hoa said that she has only leased a few premises for short durations to foreign investors. To date, three business premises have been leased by Dong Hung to Giant South Asia Investment, which then turned Citimarts into Wellcomes.

Other foreign retailers have also followed the Singaporean group’s move to set foot in Vietnam’s market by hiring existing business premises from domestic enterprises.

Two years ago, when the owner of Mien Dong supemart on Hoang Van Thu street in Tan Binh district in HCM City sought partners to sell the business premise, a lot of retailers, foreign and domestic, including Saigon Co-op, tried to negotiate with him to get the premise. Finally, Big C won the race. Big C Hoang Van Thu has become a big supermart in the locality.

Japan’s Daiso, which has 2,700 stores worldwide, has also set foot in Vietnam through a franchise contract with a Vietnamese partner, Tri Phuc Co Ltd (Tri Phuc is now the investor of the duty-free supemart Fuso at Moc Bai border gate in Tay Ninh province).

Tri Phuc, since getting a franchise contract, has opened a series of shops at its duty free chain in Tay Ninh, and it is planning to open three more shops in Hanoi and HCM City.

Last year, GR Vietnam Holdings Ltd, belonging to Hong Kong’s Golden Resource Development International, also shook hands with Vietnam’s Foocosa to develop 500 convenience stores throughout the country. With the plan, the two sides plan to set up a joint venture with the chartered capital of $11mil with 51% of stakes held by the foreign partner.

It is expected that the first 40 shops of the joint venture will become operational this year. In the immediate time, 20 existing Foocosa shops will be upgraded to help the joint venture to quickly conquer the HCM City market.

Vietnam’s retail market with the estimated turnover of $50bil by 2010 is becoming a fertile market for foreign investors.