It is becoming more and more difficult for manufacturers and suppliers to distribute their products via supermarkets.
Pham Thi Huan, owner of Ba Huan Enterprise, had to delay a plan to go to Australia because she had to attend a meeting between a retailer and suppliers days ago.
Huan attended the meeting in person because she wanted to meet the leaders of Vincommerce directly to learn about the opportunity to bring Ba Huan’s products to VinMart/VinMart+ networks, run by Vincommerce.
Vincommerce’s network of supermarkets and convenience stores has more than 2,600 sale points and strives to have 10,000 points by 2025. This explains why Ba Huân and enterprises such as Vinamilk, Thuan Phat Paper and Vissan all want to promote sales through the network.
However, according to Huan, except poultry eggs, Ba Huan still cannot bring other products to VinMart/VinMart+, though Ba Huan has spent VND1 trillion to build up a farm-to-table safe food chain.
|All the works, from inventory management, stocktaking to data building and advertisement planning, will all apply technology. If suppliers don’t have compatible technology, they won’t be able to connect with the retailer.|
Huan was one of 200 suppliers attending the meeting of suppliers organized by Vincommerce. Enterprises all want to learn about the retailer’s new strategy and bring their products to the supermarket and convenience store chains.
According to Vu Vinh Phu, a respected retail expert, only one of every 10 Vietnamese enterprises can distribute products via foreign supermarkets, due to high costs and the high required discount rate of 30 percent.
Do Thi Thu Hang from Savills Hanoi commented that the competition in the retail market is stiff. The departure of the French Auchan from the Vietnamese market and the rapid expansion of Vingroup and Saigon Co-op in recent years shows the trend.
The fierce competition among distributors has forced suppliers to upgrade the quality of products. According to CEO of Vincommerce Thai Thi Thanh Hai, the company prioritizes long-term cooperation and applies different plans for every supplier.
One of the requirements the retailer set is synchronization in technology. It is expected that after the 2020 Tet, Vincommerce will boost sales via mobile phones, promote online sales and put into use the app reserved for the transactions between the retailer and suppliers.
All the works, from inventory management, stocktaking to data building and advertisement planning, will all apply technology. If suppliers don’t have compatible technology, they won’t be able to connect with the retailer.
Other supermarket chains including Aeon, Lotte, Big C, Bach Hoa Xanh and Saigon Co-op also have made changes in cooperation strategies with suppliers. Aeon and Big C have only accept suppliers who can compete in quality and price and meet requirements to export products to Aeon and Big C networks in other countries.
Vietnamese conglomerate Vingroup said on December 3 it has entered into a share swap agreement to merge its retail and agriculture arms with Masan Consumer Holdings, to create the country’s biggest retail company.
Local retail businesses should focus on developing their own brands, improving the product quality and diversifying products in order to enhance their competitiveness in the domestic market.