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Convenience retail giants expand networks slowly in Vietnam

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7-Eleven, which has been prospering in Thailand, and GS25, which dominates the South Korean market, still have not fulfilled their plans to expand retail networks in Vietnam. 

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Vietnam is a promising retail market

  

Vu Thanh Tu, CEO of 7-Eleven in Vietnam, stated in June 2017, when the first 7-Eleven shop opened in HCM City that the chain would develop 1,000 shops in the next 10 years, while steamed sticky rice, summer rolls and lunches will be key food products of the chain.

At that time, Kagoshima Shigeto, marketing director of Acecook, an  instant noodle maker, commented that 7-Eleven, the world’s leading convenience store chain, present in 16 countries with 56,400 stores worldwide,  will ‘change the situation of the Vietnamese retail sector’.

However, to date, only 21 7-Eleven shops have opened, according to Cafebiz.

In late 2017, GS Retail, which is running the GS25 convenience store chain in South Korea, came to Vietnam through cooperation with Sonkimland.

GS25 has 30 percent of the South Korean retail market.

GS25 opened its first shop in HCM City in January 2018, while revealing an ambitious plan that it would build a food processing workshop in Long An province, make its presence in Hanoi and set up 2,500 shops in the next 10 years, of which 50 shops would be opened by the end of 2018. 

However, according to Cafebiz, only 16 shops have opened so far. 

A branding expert commented that convenience store chains sell food for lunch, but the method is inappropriate.

He said Vietnamese do not have the habit of taking away meals to have lunch on the pavement or in parks. Therefore, it would be better to serve  lunch in a designated space with seats. 

However, it is difficult to find premises in Hanoi and HCM City with area large enough.

Nguyen Huy Hoang from Kantar Worldpanel pointed out two big challenges in developing convenience store networks in Vietnam.

The biggest challenge is the lack of retail premises. A convenience store must have an area of 60 square meters at least. As the premises must be located in advantageous positions, the rents are extremely high.

The other challenge is the big operation cost. Some sources said Family Mart and Circle K still cannot make profits.

Cafebiz reported that Circle K has 300 shops in Hanoi, HCM City and Vung Tau, as shown on its website, while Ministop has 111, 7-Eleven 21 and GS25 16.

 

Source: VNN

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