Article 8

Foreign players dominate Vietnam’s corner store market

A Circle K convenience store is seen on Dang Van Ngu Street in Ho Chi Minh City, Vietnam. Tuoi Tre

It took Singaporean-owned Shop&Go convenience store chain less than a decade since its arrival in Vietnam to hit the milestone of 100 outlets countrywide and become the top corner shop operator in the Southeast Asian nation.

The operator of 103 corner stores across Vietnam has planned to open another 30 outlets by the end of this year to fortify its dominance in a booming market where foreign players are rapidly expanding their presence. Shop&Go arrived in Vietnam in 2005 and opened its 100th store in November 2013.

Corner shops operated by many other international retailers have mushroomed in Vietnam over the last few years, creating an expansion race to dominate the thriving market.

Texas-based Circle K debuted in Vietnam in 2008 and has since opened 73 shops in Ho Chi Minh City, the country’s southern economic hub. The U.S. firm is adding a few new outlets in the city on a monthly basis.

Family Mart from Japan is getting closer to the target of opening another 50 corner shops in HCMC by this year-end from the current 34 outlets after only five years of presence in the Southeast Asian country.

The Japanese chain officials have also revealed that they will expand into neighboring provinces like Dong Nai and Binh Duong, and even the capital city of Hanoi.

Another player, Big C Express, operated by French mass retailer Groupe Casino, has also been expanding gradually in the southern city.

Meanwhile, Vietnam only has two prominent competitors, Co.op Food and Satrafood, which some experts said have less advantage in terms of financial ability and business strategy compared to foreign rivals, and thus could lose their market share on home soil to the latter.

Saigon Co.op locally famous for its Co.op supermarket chain has opened 72 Co.op Food corner stores in HCMC since the inauguration of the first outlet in 2009. Satrafood, run by Saigon Trading Group, merely has 32 stores across HCMC, where its operator is headquartered.

With new convenience outlets mushrooming, there are several streets in HCMC where three stores of different chains are located, fostering the fierce competition among the operators.

Shifting behavior

The corner store operators would not have been so eager to dominate the market if it had not been for a shift in the shopping behavior of Vietnamese consumers, especially women who have to cook after a busy, tiring day at work, according to industry insiders.

“Everything I need is available at the corner shop,” Hai Yen, who teaches at a high school in District 1, told Tuoi Tre after her shopping at a Big C Express store in Tan Binh District.

Yen said she would stop by a convenience store, instead of a supermarket, whenever she left work late as it helps save her time. “Just do a quick shopping and I’ll be at home on time,” she said.

The teacher bought a wide variety of goods from the corner store, from ingredients to cook her dinner to essentials for her kid to go on a sightseeing tour the following day, without losing time parking her motorbike and queuing at the busy checkouts in supermarkets.

A common strategy for the corner shop chain operators is to increase their presence and familiarize consumers with shopping at convenience stores.

The companies may suffer losses during this period, but they will begin to rake in profits after five to ten years, according to Yamashita Junichi, general director of Family Mart Vietnam.

Once the shopping behavior has changed, the operators will be able to reap profits, he said.

A Vietnamese retailer expert also said the priority of the foreign corner store operators is to expand their network.

“With deep pockets, the foreign companies constantly add new outlets at the prime locations throughout the southern city,” the expert told Tuoi Tre, wishing to remain anonymous.

“When this target is reached, they will begin to dominate this ripe market.”

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