Malaysian department-store operator Parkson is to quit operating full-scale stores in Vietnam after years of losses.
At one stage the company had 10 stores in the country and was confident of long-term success given it was the first overseas department-store brand to enter the market.
This week, Singapore-listed Parkson Retail Asia announced that, subject to shareholder approval, it will sell the Parkson TD Plaza Shopping Centre it anchors in the northern port city of Haiphong for US$10 million, representing a $500,000 loss on book value, but a $500,000 premium on local valuation. Parkson’s Vietnam operations are owned by Parkson Haiphong, a wholly owned subsidiary of Parkson Retail Asia, which is two-thirds owned by Parkson Holdings of Malaysia. The purchaser is local company Thuy Dong Construction Trading.
Related: Parkson kicks off renovation project for Parkson Saigon Tourist Plaza
The disposal leaves just one property remaining in downtown Ho Chi Minh City, (pictured above), which used to house the brand’s flagship in the country. A large part of that store has since been leased out to Uniqlo and another Japanese retailer, Muji, is believed to be currently fitting out at least part of the remaining space.
“Following the completion of the disposal of the [Haiphong] property, Parkson Vietnam will only continue its business of operating and managing the store in Ho Chi Minh City, and will cease to operate any Parkson brand department store on the property.”
The way this statement is worded, it suggests that the company will no longer operate a department store in Ho Chi Minh City and by converting such large parts of the building into space leased to other retailers, it would appear the strategy is to morph into a property manager.
However, local Vietnamese media are reporting the store will reopen this Friday, July 31, but only take up the ground floor, a compact area which previously housed only a beauty zone and a large part of which has been taken over by Uniqlo.
Parkson Vietnam began renovating its six-story Ho Chi Minh City store in the Saigon Tourist Plaza building in April of last year. In recent months, a billboard has been placed on the remaining front of part of the building saying it will reopen soon.
At the time the refurbishment was announced, the company said the aim was to deliver a new shopping experience featuring modern facilities, and a higher standard of service for shoppers. But it appears as if almost all the categories it once sold will be stripped out leaving just a beauty offer.
Parkson said the new store design concept “will turn the store into an all-in-one destination that offers a combination of shopping, food & beverage, and entertainment” (translated).
It appears that Parkson has finally admitted defeat in a market where it moved rapidly into neighbourhoods with relatively low incomes, selling products that could be obtained cheaper elsewhere, and with archaic customer-service systems. One example was if a customer wanted to buy a set of towels from one concession, they had to walk to the opposite end of the floor and pay for them before being allowed back to browse other items on an adjacent display. Buying multiple items – as customers of a department store often to – required an endless series of return route marches, escorted by store staff, to a cashier’s counter, multiple debit-card transactions and multiple shopping bags – yet all transactions were processed by Parkson itself who would later reimburse concessions for goods purchased.
In October 2018, Parkson Vietnam announced its fifth store closure, in the affluent expatriate suburb of An Phu. Three more followed before this week’s Haiphong announcement.