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Convenience stores: more are being opened, but many are closing

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While many retailers have expanded their convenience store chains, others have had to scale down their networks because of ineffective operations.

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Retailers have expanded their convenience store chains

 

Vissan, a large meat supplier, has shut down 60 out of 100 convenience stores. 

Vissan’s CEO Nguyen Ngoc An said the company cut the number of stores mainly because of low sales. In other cases, it had to give the retail premises back to landlords, or it could not afford the increased rental prices.

Family Mart, a big Japanese retailer, once said that it would open 1,000 shops by 2020 in Vietnam. However, it plans to stop investments because of losses. Some stores in its chain in HCMC have closed because of unprofitable business and high rents.

The retailer now has 136 shops in HCMC and 24 in Binh Duong and Vung Tau, modest figures if noting that it is the Number 1 convenience store chain in South Korea and has 10,000 shops in Japan.

A pioneer in opening convenience stores, G7 (Trung Nguyen) brought Ministop, the Japanese convenience store chain, to Vietnam in 2011 under the franchise mode.

Its initial ambition was opening 500 shops within five years, but only 17 exist. Poor business performance prompted Ministop to say goodbye to Trung Nguyen and find new partners.

After joining hands with Sojitz, Ministop and its partner now run 115 shops. The convenience store chain has vowed to raise the figure to 800 this year and to 1,600 next year. 

However, analysts warn that the goal may be unattainable because of the stiff competition in the market and limited retail premises areas.

Vu Vinh Phu, former chair of the Hanoi Supermarket Association, said that convenience store are very attractive to both domestic and foreign retailers.

Even the giants in the retail industry, however, may have problems. 7-Eleven, for example, reaped big fruits in Indonesia, but had to shut down 136 shops in the country because of poor business performance.

“The market share doesn’t depend on the number of shops opened. Product diversification, convenience and competitive prices are the three competitive edges,” Phu said.

However, the expert still believes that convenience stores remain a very promising market segment, though many investors have complained about losses.

“Big retailers will reap fruits in the future if they can survive difficulties and accept losses for the first several years,” Phu said, adding that smaller households of four members each are on the rise in Vietnam. And these families like buying essential goods at convenience stores.

 

 

Source: VietNamNet

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