Local retailers closing shops because of Covid-19

Many retailers have had to close shops and give back retail premises to landlords because of poor patronage and a dramatic drop in sales.

In late June, The Gioi Di Dong JSC (Mobile World) closed all shops of its Dien Thoai Sieu Re (super-cheap phones) chain.

Local retailers closing shops because of Covid-19



Joining the market in August 2019, Mobile World planned to open 30 Dien Thoai Sieu Re shops by the end of 2019. However, only 17 shops had been opened by January 2020 before the chain was completely shut down in June.

Analysts believe that the problem lies in their unreasonable positioning strategy. Moreover, the demand for mobile phones has plunged, especially since the Covid-19 breakout.

Mobile World also predicted that the total demand for mobile phones and home appliances in 2020 would decrease sharply as people’s income has fallen because of Covid-19.

In late 2019, Mobile World set a target of obtaining revenue of VND122.445 trillion in 2020, an increase of 20 percent over the last year, and post-tax profit of VND4.835 trillion, up by 26 percent.

Many retailers have had to close shops and give back retail premises to landlords because of poor patronage and a dramatic drop in sales.

However, because of the pandemic, Mobile World had to lower the targets to VND110 trillion in revenue and VND3.45 trillion in profit.

 

Many retailers have had to give back retail premises to landlords, scale down their business and downsize the workforce, change business model or seek other revenue sources.

According to the Ministry of Industry and Trade (MOIT), the revenue of Saigon Co-op, which has nearly 1,000 shops with Co-opmart, Co.opXtra, Co.op Food, Co.opSmile, dropped by 50 percent during the epidemic compared with the same period last year.

Other retail chains, including Satra and Lotte, also saw their revenue drop by 50 percent during that time. Though COVID has been contained, revenue still decreased by VND1 trillion in Q2.

Do Quoc Huy, marketing director of Saigon Co.op, said that it was difficult to increase the revenue after the epidemic because businesses were facing big difficulties, while consumers tightened their purse strings.

JLL reported that the number of customers at many retail centers in HCM City dropped by 80 percent in February and March. The sharp fall in number of foreign travelers had serious impact on the retail of luxury goods. The small shops run by households are in more serious situation.

Nguyen Thi Dien, CEO of An Phuoc, said that An Phuoc is implementing old orders and it has not got new orders. The partners in Japan and Germany have left the 2020 plans open. The revenue from the domestic market is unsatisfactory as people have cut spending.

Dien said closing shops and giving retail premises back is the simplest solution to stop losses. However, An Phuoc has retained 140 shops to protect its brand.

Kim Chi 

Foreign retailers face uphill struggle

Foreign retailers face uphill struggle

Foreign retailers set to make a debut in Vietnam may find themselves in a harsh competitive landscape after the global health crisis.

Trade Ministry proposes opening fuel market to foreign retailers

Trade Ministry proposes opening fuel market to foreign retailers

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