Retail chains specializing in products for mothers and children now have to compete with private shops and vendors, whose low cost is a great advantage.
VI Group has announced it has pumped capital into Kids Plaza. The group, which is managing $400 million worth of assets, has become the minority shareholder of the retail chain, but declined to give detailed information about its ownership ratio.
Analysts commented that the investment in Kids Plaza will lead to cutthroat competition among the three big players in the market. The Kids Plaza chain has the lowest number of shops among the three.
Prior to that, Bibomart received investment from ACA Investments belonging to Sumitomo Group. Meanwhile, Con Cung, the leading retail chain, got support from Daiwa-SSIAM II co-managed by Daiwa and SSIAM.
Trinh Lan Phuong, chair of Bibomart, once said the mother-and-kid product market value had exceeded $7 billion, triple the figure predicted by FTA, a market analysis firm.
With millions of babies born every year and the increasingly high income of parents, the mother-and-kid market has had a two-digit growth rate in the last few years.
While the products available in the market are mostly imports, distribution is being undertaken mostly by domestic companies. The number of distribution chains bearing foreign brands in Vietnam remains modest.
“At this moment, I cannot see any foreign owned chains which are big enough to change the face of the market,” said Luu Anh Tien, founder of Con Cung JSC, which owns Con Cung and ToyCity retail chains.
This is the largest chain of its kind, with 318 shops across the country, including 288 Con Cung shops and 30 Toy City shops. Tien said 130 shops were opened in 2017, a part of the plan to open more than 1,000 shops by 2020.
Bibomart was established in 2006, but only since 2014 has the retail chain begun its expansion. To date, it has 140 shops, mostly in Hanoi and HCMC.
Meanwhile, Kids Plaza has 74 shops in seven cities, two-thirds of which are in Hanoi. Having relatively high revenue of VND390 billion in 2016, the profit made by Kids Plaza was VND500 million only.
However, BiboMart, Con Cung and Kids Plaza are not the only influences in Vietnam’s market. They have many other rivals such as e-commerce floors, social networks and private-run shops.
An analyst said Vietnamese mothers are buying more items via social networks. The retail cost via the channel is low, partially because sellers don’t pay tax. This allows sellers to sell products at more competitive prices.
By Thanh Lich