In 2015, the first Bach Hoa Xanh store with floor area of less than 100 sqm opened in Binh Tan district in HCM City. At that time, analysts said that this was a daring move as the store was located next to traditional markets, and like traditional markets, it also sold fresh food and essentials.

With the slogan "cheaper than in traditional markets" and a modern sales model, Bach Hoa Xanh attracted many consumers. In 2018, the average revenue of each store of the chain reached VND1.2 billion a month. There were 405 stores and 90 percent of them were located in HCM City.

Later, Bach Hoa Xanh reached out to other cities and provinces. In 2019, Bach Hoa Xanh had 900 stores in southern provinces, and the eastern and southern parts of the central region. It also provided online sales in Bien Hoa City I  Dong Nai province.

As of August 2021, the retail chain had 2,000 stores in the central and southern regions.

Bach Hoa Xanh met with good fortune when traditional markets had to close during the pandemic. The number of visitors to Bach Hoa Xanh stores were so high that overloading occurred on some days.

However, when the lockdown was lifted, Bach Hoa Xanh’s business became worse. Its sales in Q4 2021 were lower than that of previous quarters. In 2021, Bach Hoa Xanh had turnover of VND28.2 trillion, up 33 percent compared with 2020.

Under its 2022 business plan, The Gioi Di Dong (Mobile World – MWG) will not open new Bach Hoa Xanh store this year, and will spend time consolidating the operating foundation and preparing for expansion in 2023. The chain hopes to make 20-25 percent of the group’s turnover.

Tran Kinh Doanh no longer manages Bach Hoa Xanh’s operation. Nguyen Duc Tai, chair of MWG, will undertake this mission.

MWG has set up the subsidiary Bach Hoa Xanh Technology and Investment JSC with charter capital of VND10 billion. MWG will transfer all shares it holds in Bach Hoa Xanh to the new company. The transfer value is VND12.795 trillion.

Bach Hoa Xanh has begun its restructuring process, shutting down a series of stores. As of July 13, the number of stores had fallen by 316 to 1,824 and it still continues to handle ineffective stores. The number of stores to shut down will increase in the time to com because no new stores will open this year.

Stiff competition

Vietnam is considered a retail market with great potential. However, the competition in the market is stiff. An expert commented that to survive the competition, retailers need to have a lot of money for retail chains.

Like Bach Hoa Xanh, Vinmart, after the transfer to Masan Group, shut down 700 sale points, reducing the number of stores to 2,231 as of the end of 2020. But Bach Hoa Xanh still cannot be compared to Vinmart as it has not expanded to the north.

The stiff competition in the retail market explains why many big investors jumped into the business field but then had to leave. Son Ha Group planned to join the retail market, but later withdraw capital from Hiway supermarket. Meanwhile, Fivimart has been sold to Vinmart after a period of continued losses.

Retailers not only have to compete with each other but also with e-commerce. Marketplaces are scrambling with retail stores for clients. In Hanoi and HCM City, consumers now can buy fresh food online and products that are delivered to customers within two hours.

A report found that Tiki, Lazada and Sendo, large e-commerce platforms, joined the program on selling food to people during the pandemic and some platforms sold more than 100 tons a day.

The food retail market has new chains with increasingly large coverage, such as Soi Bien, Bac Tom, DaLat Mart, Cleverfood, and Tam Dat Huu Co. 

With a small scale which optimizes operation costs, convenience stores and food retail chains have become more favored to consumers as they provide fresh food in residential quarters.

Other rivals, especially foreign ones, are also scaling up their business. Japanese Aeon has set up its Aeon MaxValu stores in residential quarters in HCM City, competing with Bach Hoa Xanh in the same market segment.

Duy Anh