Household groceries compete equally with modern retail chains

29-Sep-2020 Intellasia | Vietnamnet | 6:02 AM Print This Post

Contrary to all predictions, modern convenience stores and supermarkets, with powerful financial capability, have not led to the closure of traditional household-run groceries.

Many convenience store chains, such as VinMart, Circle K, Family Mart, Co-op Smile and Satrafoods, have opened, present in every residential quarter and satisfying all consumers’ needs, from needles and thread to vegetables and fish.

However, surprisingly, traditional groceries still thrive, despite the strong rise of these retail chains.

Nga’s grocery, for example, is located in Long Bien district in Hanoi. Nga is busy selling goods all day and the grocery enjoys many sales, though it is located near a convenience store.

The grocery offers food and essential goods, from batteries to phone scratch cards. On holidays, when demand increases, Nga only closes her shop at midnight.

Buyers mostly make payments in cash. But Nga also accepts online payment of different kinds. The buyers are mostly people in residential quarters nearby, whom Nga knows well. Therefore, customers can buy things on credit and pay money after some days.

According to Nielsen, Vietnam has 1.4 million groceries and 9,000 traditional markets, which make up 75 percent of the retail market share and bring revenue of $10 billion a year.

Meanwhile, Kantar Worldpanel Vietnam reported that traditional retail channels (traditional markets and groceries) satisfy 85 percent of the needs of customers.

Nine out of 10 polled customers, or 92 percent, said they prefer buying essential goods from groceries. Vietnamese have the habit of going to groceries because they are are small scale, require low operation costs, and can sell products at low prices.

According to Nguyen Ngoc Tram from JLL Vietnam, traditional markets are still the choice of the majority of consumers.

However, analysts said groceries now are different from what they were in the past. They not only sell essential products priced at several thousand dong for each item, but also wholesale rice, sweets and dairy products for large manufacturers.

They manage ‘ sales and run delivery services just like modern retailers.

DInh Thi My Loan, former chair of the Vietnam Retailer Association, noted that traditional retail has to adapt to new circumstances.

Traditional retailers compete with modern retailers and understand consumers’ needs, so they know how to better serve customers.

Traditional retailers have made changes to satisfy customers: they accept e-payments, use both online and offline retail, try to approach modern methods in goods display, and connect customer feedback with manufacturers.

Many sales management solutions for groceries have been designed. Sapo X provides software to manage sales at shops and chains.

KiotViet uses cloud computing technology that allows retailers to access sale data anytime and anywhere. Shop owners can now update selling prices and confirm orders quickly and conveniently.

With Vinshop, a new app, groceries can connect to manufacturers through intermediary distributors, which minimises costs. In addition, groceries are now using new payment tools such as e-wallet and QR Code.

In late 2019, Telio, a platform connecting business households with wholesalers, mobilised $25 million worth of capital from Tiger Global, Sequoia India, GGV Capital and RTP Global.


Category: Business, Vietnam

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