As the local demand for smartphones reaches the saturation point, technology retailers Mobile World and FPT Shop have been steadily changing business orientations, working to expand into other segments.
Mobile World and FPT are both looking for alternative sources of revenue
Specifically, instead of targeting mobile devices like before, chairman of Mobile World’s Management Board Nguyen Duc Tai announced a new focus on boosting the corporation’s Bach Hoa Xanh grocery store chain at the annual shareholders’ meeting in March.
Similarly, at FPT Group’s shareholder meeting, Nguyen Bach Diep, chairman cum general director of FPT Retail’s management board, announced plans to open hundreds of Long Chau drug stores in the next few years, while no plans were mentioned to open FPT Shop stores in 2019.
Explaining the reason behind the shift, many experts stated that local demand for new gadgets is not as high as before, so retailers have been looking for new directions to keep growing.
Germany-based market research company GfK forecasted that the local mobile market in 2019 will only grow by 1 per cent – the lowest ever growth rate.
Tai from MWG himself admitted that the time when people are lining up to buy new smartphones is over. “I use an older smartphone and don’t feel like upgrading because it’s still good enough to use.”
His example partly shows a determining new shopping attitude among Vietnamese consumers – purchasing new devices for their needs and not for the new experience and features.
Since early 2018, Mobile World has been limiting the expansion of thegioididong stores, with no new stores opened last year and 40 stores closed to focus on developing electronics chain Dien May Xanh. This is completely contrary to the corporation's speed of opening three stores within two days in 2015-2016.
FPT Retail, also feels that the market is reaching saturation as its iPhone sales in 2018 were quite gloomy. This is also the reason why no F.Studio stores, its Apple Premium Reseller (APR) stores, will be opened.
“Sooner or later the smartphone market will reach saturation if no breakthrough products appear,” Diep said. “No single business model can help companies to keep growing forever. As a retailer, we understand that once we occupy a certain market share in a sector, there will be no more room for growth and we will need to look for greener pastures.”
However, while the old segment is faltering and new segments have yet to mature, the two giants are hard-pressed to maintain their revenues.
Accordingly, Tai from Mobile World said that the company will grow by selling goods that it never sold before, specifically household appliances. Since March, the company has been piloting the shop-in-shop model to sell new goods like watches at thegioididong and Dien May Xanh stores.
Meanwhile, FPT Shop is planning to sell spare parts directly imported from manufacturers to secure its profit lines and ensure reasonable prices. VIR