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2023: The retail market of Vietnamese consumer goods after the "rebranding" commercial affairs

Vietnam's retail industry, particularly consumer goods retail, is gradually "recovering" from the effects of Covid-19 and is expected to experience rapid growth. The modern marketing trend is a key factor driving this recovery. The retail market in Vietnam is projected to grow by $163.5 billion with an 11.4% compound annual growth rate from 2022 to 2027, according to a report by Technavio.


The overall depiction of the Vietnamese retail industry during the period of 2019 to 2022 is characterized by dark hues. The period was challenging for the Vietnamese retail industry, as the Covid-19 pandemic impacted the entire economy, with consumer retail being one of the hardest-hit sectors. However, starting from the latter half of 2021, the tone of the industry has shifted to brighter tones, indicating a positive trend in recovery, particularly driven by the surge in consumer spending during the Lunar New Year celebration in 2023. Additionally, data from the General Statistics Office show that in the first 11 months of 2022, the overall retail sales of consumer goods and services witnessed an increase of 14.9% compared to the same period in 2019, prior to the outbreak of the Covid-19 pandemic. A survey by Vietnam Report found that over 53.8% of retail businesses achieved similar or better results compared to before the pandemic, which can be attributed to rising incomes, a strong recovery in tourism and related industries, and the effectiveness of inflation control measures.



Vietnam's retail sector is thriving thanks to the presence of international corporations like Central Retail, Lotte, and Aeon, and local names like Masan (Wincomerce), and Saigon Co.op. The retail market in Vietnam is estimated to be worth $142 billion and is expected to reach $350 billion in 2025, contributing 59% to the country's GDP. The growth of the middle class and increasing consumer spending is the main driver of this growth.


According to Statista, the retail value of goods and services in Vietnam decreased gradually from 2019 to 2021, with revenue recorded at VND 4,657 trillion in 2021. In 2022, the total retail sales of consumer goods and services were estimated at VND 5,680 trillion, up 19.8% from the previous year, and 15% higher than in 2019.


The competition in Vietnam's retail market is already intense, and it will only become more so with increased investment from domestic and foreign giants. The retail industry in Vietnam is not only dominated by domestic enterprises but also foreign brands from Thailand (Central Group), Korea (Lotte Mart), and Japan (Aeon supermarket).


In this article, Vietdata will highlight some of the most notable retail chains and supermarkets that have been attracting consumers lately.



Saigon Co.op


Established in 1989, Saigon Co.op is a prominent name in the retail market, operating under the brands Co.opmart, Co.op Food, Co.op Smile, Cheers, and Finelife. After 30 years of successful operation, Saigon Co.op has become the top retailer in Vietnam, holding a 43% market share in the supermarket sector in terms of sales. By 2018, the company had 100 supermarkets nationwide, over 600 points of sale, and served over 1 million customers daily.


By the end of 2022, Saigon Co.op has surpassed Wincomerce to become the largest retailer in Vietnam, with a revenue of nearly VND 30,900 billion. However, from 2019 to 2021, the company experienced a rapid decline in revenue. In 2021, Saigon Co.op reported revenue of VND 30,671 billion, evaporating nearly VND 5,000 billion compared to 2019. This decline was not only due to the Covid-19 pandemic, but also associated with a "controversy" involving business leaders. The company was investigated for super-fast and unusual capital contributions, and senior leaders were accused of violating principles of governance and administration, as well as abusing their power, leading to prosecution and detention.


Like many other retail chains, their profit after tax has decreased significantly, with some businesses reporting a loss of hundreds of billions of dong, Saigon Co.op also suffered a significant decrease in after-tax profit, with a loss of over VND 150 billion. Specifically, the parent company's after-tax profit in 2021 was more than VND 800 billion, down 16% compared to 2019.


Saigon Co.op is working towards expanding its reach and aims to have at least 2,000 points of sale by 2025. The company strives to maintain its leading position in the retail market and provide quality products to customers nationwide. The Co.opmart Operations Manager, Mr. Nguyen Ngoc Thang, stated that in 2023, the company plans to diversify its product offerings to better serve customers' needs, with a focus on family meals, health protection products, and green consumer products. The expansion will prioritize convenience store chains.


WinComerce


WinCommerce, a subsidiary of Masan Group, operates the WinMart/WinMart+ retail chain with a network of over 3,000 supermarkets. In 2022, WinCommerce successfully restructured the entire WinMart/WinMart+ retail chain and completed the rebranding in April.


Regarding the rebranding, on January 15, 2022, WinCommerce General Trading Services Joint Stock Company (a member of Masan Group) held a ceremony to announce the change of the brand name of the VinMart retail system to WinMart. Previously, the merger of the VinMart supermarket chain into Masan started in December 2019. Masan Group acquired the retail segment from Vingroup, whereby, Vingroup swapped all shares in VinCommerce into shares of The CrownX (a consolidated unit of VinCommerce and Masan Consumer) after the merger.


Since the acquisition, Masan has made significant changes to improve service quality and customer approach. From mid-2021, the company started integrating various utilities inside WinMart+ mini-marts such as Phuc Long and Reddi kiosks, pharmacy kiosks, and Techcombank's financial services. The goal is to serve 30-50 million customers by 2025 and expand to 30,000 points of sale nationwide, with an annual revenue of 7-8 billion USD and a 50% market share in Vietnam's retail industry.


Wincomerce is also a supermarket chain vying for the top position with Saigon Co.op in terms of revenue in the retail consumer goods sector. Wincomerce's net revenue in the period of 2019 - 2021 has a slight growth. In 2021, its revenue reached nearly VND 31,000 billion, a 10% increase compared to 2019, enabling the company to surpass Saigon Co.op as the leading retail consumer goods company in terms of revenue. However, by the end of 2022, the company's revenue had declined 5% to VND 29,369 billion. Despite this, the company opened 730 new mini-supermarkets, bringing the total number of WinMart+ stores to 3,268 with a store-level EBITDA margin of 6.5%.


In the previous period, especially in 2020, WinCommerce had to close more than 700 VinMart+ mini supermarkets to restructure instead of boosting sales and increasing market share. After 7 quarters of losses since the acquisition of the Vincomerce retail chain, by the third quarter of 2021, Masan began to record recovery signals from this chain. The peak is that in 2020, WCM's after-tax profit recorded a negative of more than VND 3,000 billion, by 2021, it will only report a negative of nearly VND 150 billion. These are also efforts to change both quality and quantity at this supermarket chain.


Masan is focusing on offering convenient service platforms for its customers. During a Masan shareholder meeting, the founder of Trusting Social, Mr. Nguyen An Nguyen, announced that the company will develop three platforms. "We know exactly what customers are going to buy before they even think about it. This happened in the US when sellers sent goods to consumers. If customers don't want to buy, they have the right to return. However, because the forecasting ability is too good, the return rate is very low," Mr. Nguyen shared. The second platform is a customer loyalty program. Finally, Masan and Trusting Social will launch a financial access platform, by issuing credit cards to all common customers, even without proof of income, through the EVO program.


Go!, Big C, Tops market (Central Retail)


On March 1st, 2021, the Big C brand, which had been in operation in Vietnam for 22 years, was rebranded by its parent company Central Group to Go! and Tops Market. Despite having the right to use the Big C name for another 10 years after successfully purchasing Big C Vietnam from Casino Group in April 2016, the Thai retailer chose to change its name right away.


Central Retail, a subsidiary of Central Group, has announced its plans to invest an additional VND 20,000 billion in the Vietnamese market over the next 5 years. The company will expand its retail presence from 40 provinces and cities to 55 across the country. This decision by the retail group, which owns Go!, Big C, and Tops Market have continued to affirm the great ambition of Thailand's retail giant as well as the attractiveness of our country's retail market.


In the retail segment of consumer goods, EB Services Co., Ltd (Big C Vietnam System) represents the Go! supermarket system, Big C, Tops market recorded revenue of nearly VND 16,500 billion in 2021, a decrease of nearly VND 4% over the previous year. The supermarket chain's profit after tax saw a marked decrease from 2019 to 2021, with a profit of nearly VND 60 billion in 2020, which represented a drop of nearly 70% compared to the previous year. At the peak until 2021, the negative chain reported more than VND 100 billion.


The epidemic had a heavy impact on this retail chain during this period, but as the economy stabilized and demand increased in 2022, the results for the chain became more positive. Central Retail has stated that its goal is to boost sales in the Vietnamese market from 2022 to 2026 to reach VND 65,000 billion, with the aim of becoming an omnichannel platform in the food and central commercial sectors. Currently, the Vietnamese market brings in 22% of the company's total revenue, making it the second largest market for Central Retail after Thailand.



MM Mega Market


MM Mega Market is a new brand born in January 2017 after the successful M&A deal in which TCC Group Thailand acquired the supermarket chain Metro Cash & Carry Vietnam from the German retail giant.


Although it was just launched a few years ago, MM has also shown positive business results, being one of the distribution channels that applies many innovative policies to serve customers. The supermarket chain's net revenue is declining year after year from 2019 to 2021. In 2019, MM brought in revenues of VND 14,000 billion, which decreased by nearly 3% in 2021. This decline in revenue is considered to be less than that of other retail chains; this is also thanks in part to the innovation policies of MM Mega Market during the epidemic situation In 2020, the company will implement two new business models: Depot in Phu Quoc (December 2020) and Lam Dong (January 1, 2021). Also in December 2020, this business continued to open a new distribution model, the Food Service Center, and operate the first pork transshipment station in the North.


After SATRA (Saigon Trading Corporation) and Saigon Co.op, MM's profit after tax has grown quite well. During the COVID-19 period, this is also a rare supermarket system with increased profit after tax. Specifically, in 2019, the after-tax profit of the new chain reached more than 140 billion, increasing to more than 230 billion in 2021, an increase of more than 60%.


By the end of November 2022, the brand has reached a growth milestone of 70% compared to 2021, showing that MM's "fresh, clean, and delicious" policies and criteria have had a strong impact on consumers, proving that the quality factor will become a prerequisite for the sustainable development of the business.


A representative of MM Mega Market Vietnam Co. stated that with the aim of becoming the preferred retailer for Vietnamese customers, businesses, and households. To achieve this goal, the company regularly implements various consumer stimulation programs, such as the Tropical Fruit Fair and Vietnamese Agricultural Week ...


AEON


Aeon officially entered the Vietnamese market at the end of 2009 in the form of a representative office, a subsidiary of AEON, Japan's leading retail group. On October 7, 2011, AEON Vietnam Co., Ltd. was officially established and invested in various retail businesses.


AEON views Vietnam as its second key market after Japan and has been actively developing its business strategy here. By the end of 2021, the company had expanded its shopping mall model to 6 centers, with over 40 specialty stores, since the opening of the first mall, AEON Tan Phu Celadon, in 2014.


Aeon "turned against the wind" and increased its net revenue year after year from 2019 to 2021. In 2021, this chain's revenue will be nearly VND 7,500 billion, while in 2019 it will be just over VND 6,500 billion, an increase of more than 14%. Since 2020, AEON Vietnam has continuously implemented two new business models in the northern market, namely AEON MaxValu, a small and medium supermarket, and AEON The Nine, a streamlined shopping center and ST. In the Ho Chi Minh City market, AEON changed and improved the system of Citimart supermarkets and MiniStop convenience stores. The chain also focuses on developing private-label products to attract customers and promoting e-commerce channels and non-cash payment methods.


However, according to the report, AEON's profit after tax was not so positive; this chain's profit grew in a negative direction. Specifically,  in 2021, AEON reported a loss of more than VND 75 billion. The downtrend has appeared since 2020, when AEON's profit dropped by more than 60% compared to the previous year, to nearly VND 95 billion.


The retail industry has recovered post-Covid and Aeon is seeking to construct additional hypermarkets in Hanoi. The company has set a goal to establish 20 trade centers in Vietnam by 2025. Aeon's strengths lie in its shopping centers and supermarkets in Vietnam, typically around 300 m2 in size. The new locations are slated to have a larger area of 500 m2 or more, and Aeon aims to distinguish itself with its fresh and ready-made product line applied in Japan.


Lotte Mart


Lotte Mart, a subsidiary of Lotte Group from South Korea, is a large supermarket chain that offers a wide range of products including groceries, clothing, toys, electronics, and more. Lotte Mart made its entry into Vietnam in 2008. The company previously considered China its third key market after Japan and South Korea, but due to geopolitical influences, Lotte Group withdrew from China and now considers Vietnam as its third key market.


From 2019 to 2021, Lotte Mart's revenue showed fluctuations. The revenue reached VND 6,835 billion in 2019, then decreased to VND 5,921 billion in 2020, which was the same level as in 2018. However, like most other supermarket retail chains, Lotte Mart still has a net loss. The bright spot is that the loss has gradually decreased over the years. Due to the severe impact of the COVID-19 epidemic, Lotte Mart's revenue decreased sharply to less than VND 5,000 billion in 2021. As the cost structure mainly consists of fixed assets, the company also reported a loss of VND 821 billion in profit after tax in 2021.


According to the Ministry of Finance, Lotte Vietnam Company has been negatively impacted by its focus on investing in a large-scale retail store system (long-term assets). Although the company's overall solvency in 2020 and 2021 was greater than 1, which is equivalent to the industry average, its current solvency is low (below 0.5) due to the significant proportion of long-term assets in its structure. This leads to short-term payment risks and affects the company's ability to continue as a going concern.


Although the retail business in Vietnam has not yet recorded a profit, Lotte Mart still remains committed to the Vietnamese market and has shifted its focus there after exiting China.


SATRA


On November 2, 1995, Saigon Trade Corporation (SATRA) was established with 27 member enterprises and a charter capital of VND 893.5 billion. Over time, SATRA has grown to become one of the major trading corporations with more than 70 enterprises, including subsidiaries, affiliates, and joint ventures. SATRA is the owner of a large retail system in Ho Chi Minh City, including Binh Dien Trade Center, the largest wholesale market in Vietnam. Additionally, the company operates the Center Mall, Tax Supermarket, Saigon Supermarket (Satra Mart), the convenience food chain Satrafoods, a chain of petrol stations, Satra Bakery & Café, and a Vietnamese restaurant.


Like the rest of the industry, SATRA was impacted by the Covid-19 pandemic. In 2021, the chain's revenue was reduced by over half compared to 2019, reaching over VND 4000 billion. However, the business still managed to maintain its profit after tax, not only not declining but also showing signs of growth. Specifically, in 2021, the after-tax profit of the retail chain recorded a profit of nearly VND 3500 billion, an increase of nearly 6% compared to 2019, the year the Covid-19 epidemic strongly impacted the Vietnamese market.


To achieve these results, during the Covid-19 season, SATRA focused on leading its member units to proactively prepare sources of raw materials and goods, properly implement production, storage, and business plans, especially for essential food items, and promptly meet market demand. At the same time, the company actively participated in the city's market stabilization program.


SASCO


Tan Son Nhat Airport Services Joint Stock Company (SASCO) was established in 1993 and offers a range of services, including airport duty-free shops, airport services, transportation services, and investments in tourism and real estate projects.


The aviation industry is considered to be an industry heavily affected by the COVID-19 epidemic, and related services are also severely affected. In the period of 2019 and earlier, SASCO recorded steady growth in revenue year by year, reaching VND 28,955 billion by the end of 2019. However, from 2019 to 2021, the company's revenue "dipped" rapidly. Specifically, SASCO's revenue in 2020 and 2021 is VND 918 billion and VND 321 billion, respectively, down 68% and 89% compared to the 2019 peak. Entering 2022, when the social distance is eased and the economy recovers, SASCO's revenue has grown again, recording more than VND 1400 billion at the end of the year.


Similarly, the company's profit after tax also rebounded in 2022, with a profit of VND 210 billion, surpassing the profit level 2 years prior and equaling half of the profit in 2019. In 2021, SASCO's profit after tax was only VND 3 billion, a decline of nearly 98% from the previous year.


It appears that after 2 years of being "frozen", SASCO has made a recovery and continues to make investments and implement new policies to better serve its customers.


Future trends in the consumer goods retail industry 


Vietnam is a promising market for the consumer retail industry with its population of nearly 100 million and a youthful demographic, where family consumption makes up 70-80% of GDP and is expected to reach $5,000 by 2025. The industry has seen a brighter outlook after overcoming the Covid-19 epidemic, with retail chains regaining momentum and expanding, although their profits have not fully recovered to pre-2019 levels.


VNDirect predicts that Vietnam's consumption will be strongly affected in the first half of 2023 and gradually recover its growth momentum from the third quarter of 2023. Interest rate increases will be slower in 2023 as interest rates gradually adjust to the Fed; macroeconomic fluctuations in Vietnam are gradually stabilizing, helping to improve people's consumer confidence; Consumption recovery in the EU and US regions brings orders to Vietnam's industrial zones.


At the same time, there is a fact that needs to be recognized correctly, namely, that the commercial infrastructure system, such as wholesale markets, logistics centers, and warehouses, has not kept pace with development needs, increasing trade costs and limiting competition; rural commercial infrastructure is slow to develop, affecting the exploitation of the development potential of domestic trade. Along with that, there is still a lack of close linkage between parties in the supply chain of goods (manufacturers, distributors, carriers, and consumers), especially for essential food products. The market is susceptible to fluctuations due to the impact of consumer psychology. Not to mention smuggling, commercial fraud, counterfeiting, stockpiling goods in anticipation of price increases in the domestic market, and violating competition. 


Despite these challenges, the retail consumer goods industry in Vietnam is poised for growth in the future, driven by factors such as rising purchasing power, urbanization, and a growing middle class. E-commerce is expected to play a significant role and foreign retailers are likely to enter the market, further diversifying the options available. However, retailers will need to stay competitive and adapt to changing consumer preferences.


Source: Vietdata's 2022 Retail Industry Report


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