VietNamNet Bridge – The failure of Metro Cash & Carry, a wholesale brand that achieved resounding success in many countries, except Vietnam, shows that this was not a distribution model suited to Vietnam.

Metro had experiencing prosperous years since 2002 when it first entered Vietnam.

The world’s major wholesaler from Germany with great advantages in financial capability, experience and a large distribution network opened 19 supermarkets in Vietnam over a 12-year period.

The reported total revenue of 516 million euros, or VND14 trillion in the 2012-2013 fiscal year, showed relatively satisfactory sales of the supermarket chain.

However, the German-led wholesale empire sold the business to Berli Jucker, a large group from Thailand.

Dr. Nguyen Minh Phong, a renowned economist, said Metro gained great achievements in the first period of operation thanks to a new business model, low prices and variety of goods. However, later, it then had to compete with traditional markets and other retail models.

Hoang Tung, a marketing expert, noted that Metro’s wholesale model met a consumption culture barrier in Vietnam. Positioned as a wholesale brand, at first, Metro received customers who had Metro Cards. This made the Metro brand less popular than other supermarket brands like Big C or Co-op Mart.

Meanwhile, Metro could not attract wholesale buyers with specific sale policies, especially in terms of the prices, quality and deliveries.

In recent years, Metro changed its business model, accepting all buyers, with or without cards. However, it did not succeed in attracting retail customers for two reasons. First, Metro, in Vietnamese thoughts, is a wholesale brand. Second, Metro’s rivals, who were  familiar with retail customers, prevented Metro from easily penetrating grocery segment or finding sale agents.

Barriers

Dr. Vu Dinh Anh, a renowned trade analyst, noted that Metro encountered several  barriers when doing business in Vietnam, one of which was the unprogrammed development of the distribution network. Since the Ministry of Industry and Trade did not figure out a long-term distribution system development, Metro and other businesses could not build reasonable business strategies.

As a result, Metro, the wholesale model suitable to developed economies, met many obstacles in Vietnam, which forced its owners to either change the business model or sell it.

Tung noted that the appearance of more and more formidable rivals in the market recently has put pressure on the wholesaler. The rivals have been keeping close watch over every Metro move, while running programs to retain loyal clients.

Tung, who is also a businessman in the food sector, said he often received attractive offers from Metro’s rivals, which showed that the rivals had prepared well to confront Metro.

NLD