In the past 10 years, purchasing power at traditional markets has been dropping year after year while modern-styled supermarkets have witnessed annual revenue growth of 19 - 27 percent. Saigon Co.op has even seen the yearly growth of 40 - 45 percent.
Guaranteeing quality
A representative for a market research company pointed out that a consumer in Ho Chi Minh City averagely increased the spending for supermarket shopping from VND627,000 a year (in 2005) to VND1.5 million (in 2011). His company conducted a survey into 1,000 consumers in HCM City. More than 80 percent of respondents go to supermarkets every week, compared to just 12 percent 10 years ago.
Saigonese changes in shopping habits strongly shaped business structures of supermarkets. Foods now account for 56 - 57 percent of supermarket sales.
Ms Bui Hanh Thu, Deputy General Director of Saigon Co.op Mart - a top supermarket chain in the country, said sales of fresh foods increase 40 - 50 percent a year, accounting for 18 percent or so of total revenues of the whole system. Each day, Saigon Co.op supplies more than 1,000 kinds of fresh foods through its supermarkets. It is studying to increase sales of preliminarily processed foods and well-done foods to meet the demand of customers.
Mr Nguyen Nguyen Phuong, Manager of Commercial Management Division under the HCM City Department of Industry and Trade, said supermarkets have three incomparable advantages over traditional markets.
Firstly, the quality and quantity of goods are guaranteed to be safe to use because of clear origin, expiry date, user guide and selling price.
Secondly, the volume and category of goods are very plentiful for consumers to compare and choose.
Thirdly, all supermarkets have close connections with manufacturers and suppliers which provide after-sales services like delivery, installation, and regular maintenance.
Nguyen Bach Mai, who lives at 698 Nguyen Kiem Street, Phu Nhuan District, said: Since Saigon Co.op put Co.opMart Nguyen Kiem Supermarket into operation, her family has enjoyed a plenty of benefits from this supermarket. The atmosphere in supermarkets is more hygienic and prices tend to be lower than traditional markets as well.
Developing material zones
To ensure a stable supply and most competitive prices, most supermarkets are investing in post-harvest science and technology for farming cooperatives and households and signing sales contracts with farmers.
As a pioneer in this method, Metro Cash & Carry has trained over 20,000 farmers and fishermen of safe and sustainable agricultural practices after nearly 10 years. The hypermarket cooperates with the Ministry of Agriculture and Rural Development to develop a Vietnamese agricultural practice standard called GAP Vietnam (Good Agricultural Practice for Vietnam), and coordinates with experts, Provincial/Municipal Departments of Agriculture and Rural Development, and local governments to train farmers of aquaculture, feed, sustainable water control and food safety. The training also provides an opportunity for farmers to discuss each other and draw experience for better production as they not only sells their spot Metro but also to many merchants.
Saigon Co.op’s Deputy General Director Bui Hanh Thu said that more than a half of fresh foods being sold in Saigon Co.opMart supermarkets are produced on financial advance and technical guidance from Saigon Co.op. Manufacturers, distributors and consumers enjoy benefits together from this connection - a prerequisite for sustainable development.
The capital investment and involvement in production process not only help Saigon Co.op take initiative of supplies and stabilise prices and help suppliers to have more time to catch up with new changes.
In case suppliers ask for price increase, Saigon Co.op will have the ground for price negotiations in the direction that is most beneficial to consumers. Also with the initial financial support, many cooperatives have stable sales, helping its member farmers to increase incomes. Farmers learn modern production processes and preliminary processes from simple traditional practices. As a result, their products have higher value.
Self-contained process
Supermarkets, all alike, are developing product supply chains, gradually completing self-contained production process, strictly controlling quality and food safety. Recently, they develop their own brands and labels development. Co.opMart, Big C and Metro now have more than 500 self-labelled products whose prices which are 5 percent - 10 percent lower than products of the same kind because they do not have to spend on advertisement.
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As of December 31, 2011, Ho Chi Minh City had 140 supermarkets, 25 modern general and specialised shopping centres, more than 500 convenience stores, and thousands of grocery stores.
Basing on the value, modern shopping channels (including shopping centres, convenience stores and supermarkets) in HCM City make up for some 35 percent of retail sales, more than doubling the rate of 15 percent in 2007, and higher than the country’s average of 20 - 22 percent. Revenues of supermarkets and shopping centres increase 19 - 27 percent a year on average and their tax payments rise 26 - 28 percent.
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Unique products self-made by supermarkets in a self-contained process create a difference in business. For example, Saigon Co.op has completed planting and packing its Co.op-branded vegetables, roots and fruits through the Canada-funded Food and Agricultural Products Quality Development and Control Project (FAPQDC).
With this project, Saigon Co.op also coordinates with farming cooperatives to support, train and advise food controlling, packaging and storing processes, lend cooperative members to invest in preliminarily processing and packing lines, and funds the completion of VietGAP-standard food supply chains in Song Than Industrial Zone.
Metro Cash & Carry has also drastically carried out the B2B (business to business) strategy. In November 2011, it started operating a seafood transhipment centre in Can Tho City with an annual capacity of 2 million kilos. This is an exemplary public - private partnership (PPP) project. It supplies fresh and processed fish to Metro wholesale centres nationwide, meeting international standards on hygiene, food safety and origin.
SGGP
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