VietNamNet Bridge – Convenience stores are being excluded from the market as they now must compete with big foreign retail chains.

A mini shop on a crossroads near the center of Hanoi, for example, does not attract the attention of passersby unless they look closely at a small board hanging at the entrance, on which the English word “mart” appears.

If they enter the shop, they see an ECR (electronic cash register) which can print invoices. This is another sign that helps people differentiate a convenience store and a kiosk at traditional markets.

The products in the convenience stores are displayed on shelves. However, as the store is so cramped, buyers cannot find products they want and have to ask for saleswomen’s help.

The convenience store proves to be not so convenient for customers at all. Meanwhile, the selling prices quoted here are about 10 percent higher than at traditional markets.

This is how the majority of Vietnamese-owned convenience stores in Hanoi operate.

Convenience stores and mini marts were thought to be a “playing field” suited to Vietnamese investors, who have little investment capital, but understand customers well, and have the flexibility of setting up shop in residential quarters.

However, this hasn’t turned out well. Customers who have low income would rather go to traditional markets, while high-income earners go to big supermarkets rather than mini marts or convenience stores.

In 2006, the first convenience stores bearing the G7 Mart brand turned up in the market. At that time, Dang Le Nguyen Vu, owner of the Trung Nguyen Group, which ran the G7 Mart chain, said that 9,500 G7 Marts would open in the near future.

However, G7 Marts have, one after another, left the market and now exist only in customers’ minds.

Other Vietnamese investors are struggling to exist. Co.op Food, which opened its first convenience food store in 2008, now has 60 stores in HCM City and neighboring provinces, while Satrafood’s chain now has 42 shops.

Foreign shops expand in big cities

While Vietnamese investors remain indecisive about the retail models they should follow, foreigners have been expanding their shops at a rapid pace. While many of these shops are open 24/7, domestic investors are unable to do the same.

Arriving in Vietnam in mid-2005, the Singaporean Shop & Go chain had 111 shops as of August 2014.

Meanwhile, Circle K from the US has 70 shops in HCM City, and FamilyMart from Japan, 50 shops. Big C has also recently opened a series of convenience stores with Big C Express brand.

Pham Dinh Doan, a senior executive of Phu Thai Group, said VND10 billion would be not enough to develop a convenience store chain as people once thought.

Each Phu Thai shop needs investment capital of $80,000, which means a total of $30 million for the first 300 shops.

Duy Anh