Race suffocation in the supermarket sector

Race suffocation in the supermarket sector
From familiar names such as Lotte, Berli Jucker ... to rookies in Vietnam as Aeon, Cetral Group or Vingroup, 2014 witnessed a vibrant retail market.

With a population of over 90 million people and the majority of working age, Vietnam has become an attractive investment location for the retail industry - distribution. In particular, the door wide open in the ASEAN market in 2015, many items reduced tax rate of 0% is even encouraging foreign giants before pouring money to catch opportunities. Here are five giants in the field of supermarkets have joined the race drama about the market size in the past year.

1. Aeon (Japan)
Founded over 250 years ago from a store specializing in providing materials, clothing accessories kimono, far Aeon has become a global retail giants, appeared in 14 countries with revenues of nearly 60 billion years 2013.
Aeon began operating in Vietnam since 2009 in the form of a representative office and approved the company founded in 2011 with registered capital investment of nearly 205 million. This is the first step to developing Aeon construction activities, organization, business management and commercial centers, department store and supermarket. In early 2014, the company has declared truogn first commercial center in Vietnam, located in Tan Phu district (HCMC) and the end of the second center in Binh Duong.

Aeon's objective is to open in 2020 and operated 20 shopping centers and supermarkets across Vietnam. Meanwhile, across the globe, he grew a total of nearly 16,500 this center, shops.

Berli Jucker 2. (Thailand)
2014 is a busy time of the third richest billionaire Thailand - Mr. Charoen Sirivadhanabhakdi. After engaging in retail chain Family Mart (now renamed B's Mart), between 2014, the company Berli Jucker billionaire shocked the market when it bought hypermarkets Metro Cash & Carry Vietnam from German bosses.
Metro Cash & Carry Vietnam (Vietnam MCC) consists of 19 distribution centers and portfolio of real estate related, was bought for 655 million euros. After the deal, Berli Jucker into account the increase in the presence of Thai goods in supermarkets. She Metinee Issarajinda - Assistant Vice President in charge of investor relations, said the company BJC will send 10 experts to Vietnam to help structural adjustment items.

Also, Berli Jucker also plans to open 205 stores branded utility B's Mart in the next 4 years. In Thailand, the company has a market capitalization on the stock market is about 88 billion baht (about 2.8 billion US dollars). The Group has 6 offices in Southeast Asia with a total turnover in 2013 of about $ 1.3 billion.

Besides expanding the distribution system, while taking into account Charoen Sirivadhanabhakdi penetrate Vietnam beer market, which is the potential for double-digit growth. Thai Beverage - a subsidiary of billionaire others have recommended buying shares of Sabeco - the country's largest brewer. Thaibev currently owns two brands and Chang Beer Thai Oishi green tea. Sabeco company valuation of $ 2 billion.

3. Central Group (Thailand)
Following the successful boss in Vietnam's retail market, in 2014, the Group Central Group of Thailand's richest families Chirathivat official system is performed with Robins mall in Hanoi and HCMC.
4. Lotte (Korea)
In Vietnam since 2008, but the first 5 years of the Lotte supermarket (Lotte Mart) appears only in the southern provinces. To 2014, the Korean retail giants march into Hanoi with scale plans to open the first location has an area of ​​over 20,000 m2 and opened Lotte Center Hanoi - the second highest building with a total area cities 253,000 m2 floor.
5. Vingroup (Vietnam)
A new comer in the market, but not inferior Vingroup when planning large-scale expansion in the period itself is a business toi.Xuat real estate owned hundreds of thousands m2 business center as well as common areas luxury apartment in the big city, Vingroup available advantages to become retailers caliber. As early as 2013, the group has five bared penetrate through to birth mall chain for children and companies specializing in e-commerce.

Quarter IV / 2014, Vingroup officially entered the market, not through self-chain investment that acquires commercial centers Ocean Mall and Ocean Mart supermarkets of Ocean Group (Ocean Group). Vinmart retail brands and Vinmart + Vingroup also used for retail distribution systems around.

Initially, Vinmart conducted restructuring of existing supermarkets 13 Ocean Mart across the country, a total area of ​​over 40,000 m2. In the next 3 years, the company plans to expand to 100 supermarkets and 1,000 convenience stores across Vietnam through new investment or M & A.

Even in the last days of the year, marked the expansion Vinmart regain the 10,000 m2 floor of 79 Market stores, which belong Alphanam. Next time, Vingroup supermarkets will continue to expand into more residential areas, densely populated province in the country.

FMCG PICKS UP AS ECONOMIC CONDITIONS IMPROVE IN VIETNAM

Vietnam’s economic expansion quickens to 5.54% in the third quarter, mostly thanks to rising foreign investment that helps support manufacturing and exports. GDP growth in the first three quarters of this year picks up to 5.14% from 4.73% of the same period last year, signaling the prolonged slowdown will soon fade out. Yet, it is quite early to conclude whether a strong and sustained rebound is on its way as the main driver of the economic growth in quarter 3 is not much of local but foreign demands.

Quarter 3 ends with some positive signs in FMCG market, recording a value growth at 11% in urban and 13% in rural market. Personal Care keeps on leading the growth in urban market with strong gain in baby care, while Beverages continues to be the key driver in rural market. In terms of retail landscape, except stagnant wet market, all key channels maintain a healthy 2-digit growth over the third quarter.

During this quarter, Kantar Worldpanel notices the excellent growth of Floor Cleaner in Urban with 31% volume growth thanks to rapid expansion in buyer base with 133,000 new households recruited in the last three months. In Rural, Baby Diaper was the most outstanding category with 75% uplift in volume consumption by successfully expanding its reach to additional 338,000 new households and increasing average consumption by 25%.

Tough economic conditions combined with an explosion in new technology and an appetite for all things digital means that shoppers no longer follow a simple linear path to purchase. Being relevant at the place of purchase is not enough. It’s important to recognize that the shopper journey starts at the point where people identify a need to purchase, wherever that might be! 55% of shoppers make shopping list before going to stores and this ratio is much higher among modern trade shoppers. Besides “to fill-in few items”, which is the key reason for shopping across channels, promotion is also a tool to attract shoppers for modern trade.

So many decisions are made in stores! Especially in modern trade and wet market as 64% of the shoppers there say that they did buy something out of their plan. Visibility and promotion are the two factors impacting them the most. Brands should not just get into the stores. To really get the attention, it should be outstanding with good designs and placed in the diamond zone. David Anjoubault – General Manager at Kantar Worldpanel Vietnam – concluded, “Consumers are “forward thinking” while shoppers are “task-oriented”. Understanding the path to purchase of your shoppers will help you make the right marketing strategy to influence them.”

ACCELERATING GROWTH IN FMCG CONSUMPTION IN VIETNAM

Recent movements of Consumer Price Index have fuelled some concerns of another price hike to come by end of this year. CPI in August rises by 0.83% against the previous month and by 7.5% against the same period last year, a significant lift from 0.27% and 7.3% by end of July. However, slightly positive signs of improvement can be observed in the current economic situation since total retailed sales of consumer goods and services of the first eight months of this year rises by 5.1% (inflation excluded) and employment index for industrial enterprises as of 1st August 2013 rises strongly by 2.6% from a year ago, suggesting a brighter expectation of both overseas demands and domestic consumption.

According to observation by Kantar Worldpanel during the latest 12 weeks ending 11 August, after several months of stagnant growth, FMCG market in Urban has reached its 2-digit growth rate for the first time at 10% in value. FMCG growth in Rural touches its highest level since end of 2012 at 14% in value and 11% in volume, rising more strongly on a slightly brighter view of the economy. Most key channels enjoy early signs of improvement, especially Hyper and Supermarkets, where growth is gaining speed, though not at fast pace as last year. Wet market in both Urban and Rural areas remains stagnant.

Personal Care continues to lead the value growth in Urban FMCG market. Demand for Baby Care and Facial Care products is leading the way, with value growth recorded at 34% and 26% for each sector respectively. Noticeably, Baby Wipe has become the hottest category in Urban market. Urban consumption of Baby Wipe has surged up by 51% in terms of volume, mostly thanks to a 32% increase in average household consumption.Meanwhile, recent boom in in-home consumption of beverages is notable among Rural families. Among all beverage categories, Carbonated Soft Drink (CSD) has recorded the most outstanding performance with doubled volume consumption against a year ago. CSD has recruited an additional 1 million rural households while managed to achieve a 63% increase in average household consumption, partly thanks to price-off campaigns of global giants.

Accounting for 70% of the population, contributing 60% of GDP, with an annual 2-digit income growth rate, Rural Vietnam is now a potential yet indispensable target in manufacturer’s growth plans. Rural homes have rapidly transformed throughout the last decade. Television sets and hand phones can now be seen in almost every Rural household. With more and more modern equipment available at home, Rural consumers are becoming more connected to the world and have more tools to ease their life. According to our Lifestyle Survey in late 2012, 1 out of every 2 families owns a fridge at home. The expanding penetration of fridges may, in turn, encourage the consumption of dairy products, beverages and other food items.

“With much lower income than their Urban counterparts, an average Rural household spends only 540,000 VND per month for FMCG with the biggest part dedicated for Packaged Foods. However, with moderate FMCG brand availability, which equals only half of Urban’s, Rural market is showing huge consumer business opportunity and plenty of first entry advantage.” – commented David Anjoubault – General Manager of Kantar Worldpanel

EXCELLENT WORK CARRIED OUT IN STORE OPERATIONS

Pictures success of the implementation of activities in the shop usually includes a combination of the following: evaluation, classification, commercial activities and advertising in stores. However, to ensure that this is taken seriously at the store and get compliance from retailers remains a major challenge for manufacturers. The data in this article is based on a recent study by Nielsen Vietnam: “Report on the demand of retailers were conducted in Vietnam”. This report showed that the confidence index of retailers, leading the concerns and preferences of retailers for various trade programs and FMCG brands. Report based on the results of more than 800 direct interviews with retail stores (there are at least 30 types of goods) in urban & rural areas.

DETERMINATION RIGHT TARGET STORES

With a sophisticated retail market so it is essential for manufacturers is to be able to identify the stores targeted to priority investments in them. Only when this phase is completed, manufacturers can focus on rolling out a reasonable plan of attack to reach the market, sales force deployment, direct access to shops or indirectly and the distribution of how to achieve the highest efficiency.

3.4 % SECTOR GROWTH FMCG WHETHER IN RETAIL THE 1ST QUARTER 2015 STILL CONCERNED

VIETNAM , 16 May 06 , 2015 – After the sharp decline of the FMCG sector (FMCG ) in sales in 2014, sales of FMCG Q1’2015 quickly showed a recovery with 3.4% growth in sales volume (up 4.0 % in value) in six major cities of Vietnam such as Hanoi , Ho Chi Minh City , Hai Phong , Can Tho , Nha Trang and Da Nang . Drinks are major factors that control the growth recovery , but other categories such as food and household care products also showed signs of recovery in Q1’2015 . However , retailers that Nielsen has interviewed expressed concern about the future , although the growth rate was recorded.The report also found that more than 80% of sales in the FMCG Vietnam still come from traditional commercial channels covering about 1.3 million retail outlets across the country. The number of traditional retail stores to see Vietnam as one of the most complex market for fast moving consumer goods manufacturer to build strategic distribution and logistics management. Moreover, according to the Nielsen report, only 30% of traditional stores contributed to 80% of sales of the leading product portfolio. So to win in markets where the traditional commercial channels dominate this powerful, the manufacturer must identify the correct target of your door because not easy to get a foothold in the market major retailers, dynamic and always changing so.Apart from the complexity of traditional trade channels , the success or failure of a brand or product in the hands of the traditional retail stores this . Indeed , in a recent Nielsen study found that only 70 % of traditional retailers to comply with the requirements of manufacturers in delivering their product – this is the important point emphasis on success for a retail store . In the brand is supported by most of the retailers Vietnam , Hao Hao , Vinamilk and Coca – Cola is the third leading brand supported by most retailers , with more than half of all stores said they will store more products , and introduce these products to the purchaser .Ms. Nguyen Huong Quynh, Director of Senior Services division of Nielsen Retail Measurement Vietnam, said: “Although the consumer sector showing signs of growth recovery in Q1, the confidence index of retailers at only 71 points, indicating that retailers are still expressed concern. So to win the hearts of retailers is not easy. The major retailers are interested in factors directly impact their business, such as the storage of goods, profit, customer service support. The key for manufacturers is how to understand the relationship That mind most thoroughly and identify the target store to ensure that retailers can collaborate and store their products in stores throughout the year. This will require a combination where different strategies based on an understanding of retailers and consumers. “Faced with the challenge of winning the hearts and loyalty of retailers, Nielsen encourage manufacturers should focus on identifying the target store, and outstanding performance deploying activities in store.

FMCG picks up as economic conditions improve in Vietnam

Vietnam’s economic expansion quickens to 5.54% in the third quarter, mostly thanks to rising foreign investment that helps support manufacturing and exports. GDP growth in the first three quarters of this year picks up to 5.14% from 4.73% of the same period last year, signaling the prolonged slowdown will soon fade out. Yet, it is quite early to conclude whether a strong and sustained rebound is on its way as the main driver of the economic growth in quarter 3 is not much of local but foreign demands.

Quarter 3 ends with some positive signs in FMCG market, recording a value growth at 11% in urban and 13% in rural market. Personal Care keeps on leading the growth in urban market with strong gain in baby care, while Beverages continues to be the key driver in rural market. In terms of retail landscape, except stagnant wet market, all key channels maintain a healthy 2-digit growth over the third quarter.

During this quarter, Kantar Worldpanel notices the excellent growth of Floor Cleaner in Urban with 31% volume growth thanks to rapid expansion in buyer base with 133,000 new households recruited in the last three months. In Rural, Baby Diaper was the most outstanding category with 75% uplift in volume consumption by successfully expanding its reach to additional 338,000 new households and increasing average consumption by 25%.

Tough economic conditions combined with an explosion in new technology and an appetite for all things digital means that shoppers no longer follow a simple linear path to purchase. Being relevant at the place of purchase is not enough. It’s important to recognize that the shopper journey starts at the point where people identify a need to purchase, wherever that might be! 55% of shoppers make shopping list before going to stores and this ratio is much higher among modern trade shoppers. Besides “to fill-in few items”, which is the key reason for shopping across channels, promotion is also a tool to attract shoppers for modern trade.

So many decisions are made in stores! Especially in modern trade and wet market as 64% of the shoppers there say that they did buy something out of their plan. Visibility and promotion are the two factors impacting them the most. Brands should not just get into the stores. To really get the attention, it should be outstanding with good designs and placed in the diamond zone. David Anjoubault – General Manager at Kantar Worldpanel Vietnam – concluded, “Consumers are “forward thinking” while shoppers are “task-oriented”. Understanding the path to purchase of your shoppers will help you make the right marketing strategy to influence them.”

http://www.kantarworldpanel.com/global/News/Accelerating-growth-in-FMCG-consumption-in-Vietnam