On the afternoon of April 17, 2024, FPT Digital Retail Joint Stock Company (code FRT) held its 2024 Annual General Meeting of Shareholders in Ho Chi Minh City, unanimously approving a revenue plan of VND 37,300 billion, an increase of 17%, and a pre-tax profit of VND 125 billion.
The plan was set by FPT Retail in the context of the general market facing many difficulties, with unpredictable developments along with growth expectations in new areas. Notably, for the FPT Shop chain, the company only expects flat revenue, while the FPT Long Chau chain is expected to increase by about 34%. FRT’s growth momentum in 2023 also mainly comes from the pharmaceutical segment.
“Price war” amidst the “winter” of the consumer electronics retail industry
“The business of products such as phones and computers is quite difficult due to the price war that started around March 2023 and lasted until the end of the year“, said FPT Retail’s General Director Hoang Trung Kien at the General Meeting.
He said that in 2023, FPT Shop had closed 30 stores and that this work will continue to be reviewed this year. According to the presentation document at the General Meeting, FPT Shop plans to close about 50 inefficient stores.
The “price war” is said to have started when The Gioi Di Dong Group (MWG code) launched the “Too cheap” campaign in April 2023. At that time, televisions and household appliances were discounted by up to 50%, and some items were even sold at “giveaway” prices.
Immediately, FPT Shop launched the slogan “Where is it “too cheap”, here it is CHEAPER”. The consumer electronics retail chain of FPT Retail even directly compared the price of cheaper phones to its competitors by a few hundred to 1 million VND.
Retailers’ efforts to adjust to attract customers stem from the context of economic difficulties, with consumers cutting back on spending, causing a decline in purchasing power for technology products.
As a result, while FPT Shop had to close about 30 stores, MWG also closed nearly 200 ineffective The Gioi Di Dong and Dien May Xanh stores in the fourth quarter of 2023. MWG Chairman Nguyen Duc Tai admitted that 2023 was one of the fiercest years in the company’s history.
Hope from the livestream wave
However, for FPT Shop, the bright spot emerged from the online sales channel. Mr. Hoang Trung Kien said that FPT Retail’s online revenue in 2023 reached VND 5,842 billion, most of which came from FPT Shop, while Long Chau’s proportion was only 8-10% depending on the month.
FPT Shop is the first consumer electronics and phone retailer to join the “wave” of livestream sales on TikTok Shop, “big play” to sell the iPhone 15 series online with a live session lasting 15 hours at the end of September 2023. Thanks to this live session, FPT Shop became the first seller to achieve a revenue of 1 million USD on TikTok Shop, along with many other impressive records.
FPT Shop’s iPhone 15 series launch livestream event on TikTok Shop. Photo: FPT Shop.
“Therefore, this is the direction that we will continue to invest in during 2024 and the following years“, emphasized the General Director of FPT Retail. It is expected that the growth rate of the online channel’s revenue alone this year will be 30%.
In addition, FPT Retail will promote products that bring higher efficiency to FPT Shop in addition to traditional products.
“Now we will consider traditional products as channels to generate revenue and attract stable customers, and at the same time introduce new services and products to serve customers. Currently, new products such as household appliances and electrical appliances account for less than 5% of total revenue, and we will strive to increase the proportion to about 10%“, said Mr. Hoang Trung Kien.
FPT Retail General Director Hoang Trung Kien at the 2024 General Meeting of Shareholders that just took place.
During the Q&A session, the leader added that FPT Shop’s gross profit margin at the end of 2023 was around 8% – “a difficult level to operate and affected the business”.
“With the efforts to shift and develop new business products of FPT Shop, we forecast to maintain the gross profit margin at 12-13%, the goal is to ensure that the gross profit is at least 2-3% higher compared to last year“, he said.
