Brands race to open convenience stores in Saigon

24-Jan-2018 Intellasia | Vnexpress | 6:00 AM Print This Post

More than 10 brands of convenience stores are cramming together in HCM City and competing intensely to find premises for new stores.

The locations which are close to markets, schools, offices and tourist routes, etc. are some of the vital criteria in premises that convenience stores are hunting for in HCM City.

Since the opening of the first store in mid-last year, so far, 7-Eleven has had 11 stores in Districts 1, 2, 7 and Binh Thanh districts, focusing in office areas, populated and high-end urban areas.

On a series of real estate classified websites, brokers continuously post information on finding premises for this brand in all districts. A source said a small area will accept the rents of about 40 million dong per month. Large areas or areas around the roundabout will be paid 90 million dong and 120 million dong per month respectively. The minimum premise must have eight meters in width and 30 meters in length.

“For important positions, the current competition in the market is very large, pushing up the price at all central locations with large population density”, said Nguyen Thi Hong Trang CEO of GS25 Vietnam on the occasion of this brand launching on January 19.

Yun Ju Young, CEO of the brand, also admitted that premises are one of the most costly items for the market penetration of convenience stores in Vietnam. Even, G25 also said there will certainly no profit or even losses in the first three years.

“Investing in convenience stores requires a lot of capital at first, from transportation system to equipment. We need to surpass this period and we have identified this problem. Only when we overcome it and replicate, can we have profits”, he said.

However, GS25 also had an advantage in the race for premises, i.e. the support of Son Kim Land. SG25 Vietnam has as much as 70 percent stake of Son Kim Land and 30 percent stake from GS25 South Korea. Son Kim Land is creating maximum condition for GS25 stores to be opened in the real estate system that the company is managing and doing business. Even, in Truong Dinh street (District 3, HCM City), a fashion store of Son Kim was converted into convenience stores.

“The surround Truong Dinh area had as many as five schools and a large community of office employees. The people living in that area had high income. We see that it is more suitable to open convenience stores in this location than fashion shops which need other fashion shops as well.

“Because of having more than tens of brands, the opening of convenience stores in the central area has always been a drastic competition. If there is no land available like GS25, there must also have strong financial power like Vinmart +. Only in last December, this brand operated more than 100 stores in 11 provinces and cities. On average, there are three VinMart+ opened every day. This brand, along with 1,000 stores, have almost been present across HCM City and expanded constantly nationwide.

Looking at the panorama, the system of convenience stores in Vietnam is racing up. Few systems report profits because they are still pouring money into premises to raise the number of stores compared to other rivals such as FamilyMart, Ministop, Circle K and B’s Mart which have constantly expanded in quantity and have now no longer been afraid of sitting next to each other.

Sometimes, on the same route of several hundreds of meters in length, consumers may choose Circle K, FamilyMart of B’s Mart depending on their hobby. Bui Thi Xuan (District 1) is an example about this. Even, just turn to Ton That Tung street, there is another 7-Eleven.

The “brand new” names such as GS25 or Toromart are also aspiring to have hundreds to thousands of stores. After three days coming to the market, GS25 is having three stores and is planning to reach 50 stores in HCM City this year. The company has the ambition to open 2,500 stores nationwide within 10 years. Having just been launched at the end of this year, Toromart plans to have 200 stores right in 2018.

As of Q2/2017 the total floor area of convenience stores in HCM City touched more than 244,000 square meters. Stephen Wyatt CEO of JLL Vietnam said he has never witnessed the queuing scene to 7-Eleven like in Vietnam. This shows that attractiveness of the retail market here.

Also according to this expert, the leasing of premises to open convenience stores has never been easier. Wyatt expects that the supply of retail premises will have another 366,000 square meters in 2018. However, the problem is the market is both insufficient and plentiful due to improper premises.

 

Category: Business

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