New consumer trend creates opportunities in Vietnam

Thanh Nien News March 22, 2008 
 
A Thai company believes it can take advantage of an emerging consumer trend in Vietnam - supermarket shopping. 

Thailand's leading technology and trading company Loxley plans to open a new chain of 24-hour convenience shops in Vietnam.

Loxley's senior international business manager, Prasert Suvithyasiri, said supermarket shopping had become increasingly popular in Vietnam over the past 10 years.

"Sometimes, your supermarkets are even overcrowded," Suvithyasiri told Thanh Nien.

Vietnamese consumers' growing predilection for Western-style supermarkets and stores is a windfall for foreign companies such as Loxley, which will be able to enter the local retail market next year.

At present, foreign enterprises can establish a foothold in the Vietnamese retail market by acquiring up to 49 percent in joint ventures with local companies.

A handful of well-known retailers including the likes of US-based supermarket giant Wal-Mart and Japan's 7-Eleven convenience store chain are assessing their chances in Vietnam.

Malinee Tratrudee, assistant vice President's secretary at CP All, which runs 7-Eleven in Thailand, said her company was considering bringing the iconic brand name chain to Vietnam.

While 7-Eleven is still pondering the idea, earlier this week, Loxley and its Thai partner, consumer product giant Saha Group, announced their intention to open their own convenience stores here.

Suvithyasiri, who has been working in Vietnam since 1995 and speaks Vietnamese like a native, said by the end of the year or early next year, the two partners would open their first stores in Ho Chi Minh City.

Although Vietnamese consumers have yet to switch wholesale from street markets to supermarkets and convenience stores, that is not discouraging Loxley.

Suvithyasiri said his company has a plan to weave their convenience store plan into Vietnamese's changing shopping habit.

In the first phase, Loxley stores would be located in areas where local residents would find it convenient to drop by for a quick shop, places near parking lots or banks.

Later, more shops would open in residential areas where local residents would find "all things they need right next door," Suvithyasiri explained.

The current high rent in Vietnam is not a deterrent for Loxley either, according to Suvithyasiri.

He said the company would not rent local space itself but rather "franchise interested households or businesses."

The mother company will only have to ensure a continuous and diverse supply of goods, he said.

Suvithyasiri admitted there was a stumbling block in Loxley's plans - Vietnamese consumers do not shop very often at night.

But Suvithyasiri said the company would press ahead with plans for 24-hour convenience stores anyway.

"In Thailand, convenience stores depend mostly on their night sales," he said.

"The case may be different in Vietnam."

Whether or not Vietnamese consumers will embrace the idea of foreign-brand convenience stores, local companies are betting domestic shops will survive the intense foreign interest in the sector.

Local retail giant Hapro plans to open more than 200 stores in 10 northern cities and provinces by this year's end.

Other retailers such as Saigon Co.op and Vinatexmart also have plans to launch new supermarkets to meet Vietnamese's growing appetite for "fast shopping."