The construction ‘season’ has begun in Vietnam. However, contrary to expectations, sales of construction material shops remain slow while average prices of the commodities have tended to escalate.
Prices increase as demand falls
All construction material shops have increased prices while the demand for the commodities has not increased yet. Prices of ceramic tiles have increased by between five and seven per cent. Accordingly, each square metre of floor tiles is priced at between VND 80,000 and 85,000 on average. Other construction materials have seen their prices up by ten per cent. The price of a Picenza water heater has increased from VND 2 million to VND 2.2 million. Similarly, the price of a LG shower faucet has been up from VND 500,000 to VND 550,000. Prices of Joden shower faucets have even increased by 30 per cent.
Despite slow sales and high prices, there are few promotional programmes developed by construction material shops. Producers have mainly offered promotional incentives to their agents. Some manufacturers have offered such promotional programmes as ‘Buy five, get one free’ for agents. Some other companies have offered a discount of between five per cent for shops.
Small shops edged out?
PhD Tran Van Huynh, chairman of the Vietnam Construction Material Association, said that Vietnamese people had been used to buying construction materials from a network of small shops for years. The business model has contributed to selling products to customers or construction works but it has proven disadvantageous.
Firstly, small shops run by households display products of various producers on a small area. Their arrangement of products is not properly spead on pavements, resulting in an unbeautiful scene of streets, where they are located. Furthermore, the quality, origin and prices of steel products sold at the shops are not clear. Even the sellers are uncertain about the quality and advantages of products to give advices to customers about products they should choose. Also, construction materials do not reach customers directly. Instead, there are intermediaries, which have added costs and prices of construction materials.
Secondly, having earned more, the requirements of customers have become more different, hard-to-please yet the existing distribution channels have not met. In fact, it takes Vietnamese people much time to seek suitable construction materials and interior products.
Thirdly, the construction market is developing. It remains difficult for local consumers to seek high-end sanitary wares, tiles and doors of the international standard as there are few options for them in the market. As a result, they have to pay much and wait for long time to place orders in foreign countries.
Modern shops needed
Talking about the building of modern construction material distribution chains, Huynh said the model with supermarkets and showrooms had existed for five years but was ineffective. There have been handful showrooms while such construction material and interior supermarkets as Melinh Plaza, Thanh Trang, Nha Vui and Viet A have occupied around ten per cent of the market share.
Construction material and interior hypermarkets and trade centres have existed elsewhere in the world for years, where local and foreign consumers can seek materials meeting their own requirements. The distribution model has helped customers save time and money as they can get information about materials and interior items they need almost immediately.
The Vietnamese market needs more hypermarkets and trade centres for construction materials and decoration items with professional management in Hanoi, Ho Chi Minh City, Da Nang, Haipong and Can Tho like developed countries to satisfy the demand of local consumers.
Huong Ly
Vietnamese
