Competitors dislodged from hot retail market

The sale of Shop&Go to Vingroup for the price of $1 has been described as a declaration of bankruptcy, rather than an M&A deal.

Shop&Go, one of the first retail chains in Vietnam, has transferred all of its 87 shops to VinCommerce, which runs VinMart and VinMart+, retail brands of Vingroup.

Competitors dislodged from hot retail market

The retail market is extremely hot

Analysts said the sale indicates a bankruptcy declaration by a retailer. In 2015 and 2016, the chain reported a loss of VND17.8 and VND38.6 billion, respectively. Its gross loss had reached VND205 billion by the end of 2016.

According to Pham Viet Anh, an expert on business strategy, Shop&Go’s finance report showed that the company had to borrow money to offset a liquidity shortage. All the assets of the chain by the end of 2016 had been created by accounts payable.

AT Kearney’s GRDI report said that Vietnam has been among the top 30 retail markets in the world for the last seven years.


AT Kearney’s GRDI report said that Vietnam has been among the top 30 retail markets in the world for the last seven years.

The General Statistics Office (GSO) reported that the retail turnover had reached VND3,300 trillion last year. The national economy maintains high growth rates, the population is young, urbanization continues, and the people’s income is on the rise.

However, despite the attractiveness, many retailers have had to leave the market, while others have not been able to implement expansion plans.

Shop&Go has left. Vissan, a meat supplier, in early 2018 said it had to shut down nearly 60 shops out of its 100 convenience stores. Saigon Co-op, considered the largest retail chain, when setting up Co.op Smile chain in 2016, stated it would open 500 shops a year. However, after two years of development, its scale is less than one-fifth of hat initially planned.

 

Family Mart also stated that it would open 1,000 shops by 2020 in Vietnam, but last year said it would stop making further investments.

Trung Nguyen, a well known coffee brand, also failed after two attempts of jumping into the retail market with G7 Mart and G7-Ministop. Other brands left Vietnam quietly after a short time. The losses and ineffective investments were the major reasons behind the departures.

VIssan’s CEO Nguyen Ngoc An said the shops did not enjoy large sales, while a representative of Family Mart cited the same reason.

Analysts said Vietnam’s retail market has become ‘cramped’ recently with the arrival of many big names, which has led to stiff competition.

The players in the retail field have had to spend a lot to struggle for market share. Vingroup, for example, reportedly spent VND16 trillion after five years of operation.

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