Though Vietnam
has fallen five grades from first to sixth in rankings of the attractiveness of
the retail market, retailers, both foreign and Vietnamese, are still trying to
set up more retail points in Vietnam.

Foreign retailers reaching out to
small provinces

In 2010,
Metro Cash & Carry opened three big distribution centers in three provinces
of Binh Dinh, An Giang and Binh Duong. In early 2011, the distributor from Germany opened a new distribution center in Vung Tau
City. General Director of
Metro Cash & Carry Randy Guttery, has said that the retailer will open more
distribution centers in other provinces in the time to come because the
business in small provinces is as good as the business of the first eight
centers of Metro in big cities of HCM City, Hanoi, Da Nang, Hai Phong and Can
Tho.

The French
retailer Casino Group also tried to expand its network in 2010, reaching out to
provinces of Nam Dinh, Vinh Phuc and Nghe An, after it’s rapid growth in big
cities.

Reaching
out to small provinces is considered a new business strategy of foreign
distributors. In the past, the distributors only targeted big cities, where the
purchasing power is high. In particular, urbanites like going shopping at
supermarkets, where they can use high quality services, they do not have to
negotiate about the prices and they can feel safe about product quality.

However,
wise retailers have found out that consumers in small provinces now also have similar
shopping habits. They have realized that residents in small provinces now also
like making purchases at supermarkets or shopping malls. Since consumers now
pay more attention to cooking hygiene, they are ready to spend more money to
purchase products at modern distribution centers, even though the products here
are more expensive.

Nevertheless,
foreign retailers have admitted that one of the reasons that has prompted them
to develop their network in small provinces is that they now find it difficult
to expand their networks in big cities. It is not easy to find retail premises
in big cities, while it is very difficult to get permission to open more
distribution centers.

Domestic retailers joining forces
with foreigners

G7Mart
Trade and Service Company which owns G7Mart chain belonging to Trung Nguyen
Group, has signed an agreement with Japanese Ministop on developing a
convenience store chain in Vietnam.
The two sides plan to set up a joint venture, in which G7Mart holds 75 percent
of stakes and Ministop 25 percent. The first convenience store is expected to
come out in May, while at least 100 stores will be set up during the first year
of operation.

Analysts
have commented that this is a wise move by G7Mart, because the cooperation will
be transfered the technology on running modern convenience store systems.
Nobuyuki Abe, an executive of Ministop said Ministop will begin labor training
immediately after the signing.

Saigon
Co-op, the biggest retailer in Vietnam
with 50 supermarkets and 100 Co-op Food shops is also considering cooperating
with foreign investors. Saigon Co-op has signed a cooperation agreement with
Singaporean NTUC Fair Price. The two partners will create a completely new
hypermarket chain which will be bigger than Saigon Co-op. The first hypermarket
of the chain is expected to become operational in 2012.

Meanwhile,
Phu Thai Group has quickly contributed capital to build the Family Mart chain
in Vietnam
after signing a franchise contract with Japanese Family Mart. In developing the
plan, Phu Thai has received support from Family Mart from countries and
territories that have successfully developed the chain in South Korea, Taiwan
or Thailand.

Phu Thai
has called on investors to join forces to develop Family Mart in order to
develop the benefits of the involved parties. Family Mart does not directly
compete with traditional shops, because the products available at Family Mart
will be 70 percent different from the ones displayed at normal shops.

C. V