Unleashing the Green Grocer’s Secret: CEO Discovers the Winning Formula for Rapid Expansion

At the Q2 2024 investor meeting, Mr. Pham Van Trong, Director of Bach Hoa Xanh chain of The Gioi Di Dong (code: MWG), shared insights on their expansion plans. According to Mr. Trong, the company has been intensely focused on improving revenue and profitability per store in the first half of the year, resulting in a slower pace of new store openings.

“Our cautious approach was necessary to find the ‘formula’ to ensure that all new Bach Hoa Xanh stores contribute to profits immediately. This strategy has been successfully implemented, and we are now seeing an improvement in the pace of new store openings,” said Mr. Trong.

In the remaining months of 2024, Bach Hoa Xanh will accelerate the opening of new supermarkets. The goal of opening at least 50–100 stores this year remains achievable.

Mr. Trong also mentioned that, in parallel with finding the right expansion formula, Bach Hoa Xanh has been developing strategies to build human resources capabilities, reduce operating and logistics costs, and improve the performance of perishable goods, among other initiatives, to prepare for new goals in 2025.

According to Bach Hoa Xanh’s recruitment page on Facebook, the supermarket chain plans to open seven new stores in August across four provinces: Ho Chi Minh City (3 stores), Long An (1 store), Binh Duong (1 store), and Dong Nai (2 stores). The MWG recruitment website also showcases active recruitment for various positions within the Bach Hoa Xanh chain.

Regaining Momentum: Expanding Again After a Period of “Reducing Quantity, Improving Quality”

The MWG-owned supermarket chain is regaining momentum and expanding its scale after a period of consolidation. Bach Hoa Xanh underwent a three-year (2021-2023) restructuring and repositioning phase, transforming from a “modern market” to a “mini-supermarket.” The number of stores was reduced by as many as 900, stabilizing at around 1,700 since Q3 2022. This strategic shift was accompanied by vigorous efforts to increase revenue, reduce costs, and optimize product categories to prove the profitability of the supermarket model.

The results exceeded expectations, with Bach Hoa Xanh’s revenue consistently growing month-over-month throughout the first half of 2024. In June and July, revenue surpassed 3,650 billion VND, accounting for nearly 30% of MWG’s total revenue. Mr. Nguyen Duc Tai, Chairman of MWG, shared that Bach Hoa Xanh’s current revenue even surpasses that of when they had 2,600 stores, exemplifying the concept of “reducing quantity, improving quality.”

“After a few years of restructuring, Bach Hoa Xanh is entering a new phase. In the past, when we went to the city to work, our parents in the countryside had to send us money. Now, the opposite will happen. Bach Hoa Xanh will start sending money back to our parents in the countryside,” declared the Chairman.

The most notable success is the profit of 7 billion VND recorded in Q2 2024, the first time in eight years that the supermarket chain has turned a profit after incurring losses in the billions. The average revenue per Bach Hoa Xanh store reached a peak of 2.1 billion VND per store per month, the highest ever, except for the July-August 2021 period, which was impacted by the COVID pandemic.

Store Revenue Growth to Stabilize: Shifting Focus to Investment in 2025

Regarding Bach Hoa Xanh’s growth prospects, Mr. Pham Van Trong predicted that store revenue could still grow but not as significantly as in the previous period. This is because many stores have already reached their maximum capacity for goods and services corresponding to their floor area (approximately 150-200 sq. m).

Commenting on the consumer goods market, Mr. Trong anticipated a growth in the second half of the year, albeit not substantial. In the remaining months of 2024, Bach Hoa Xanh will continue to explore ways to reduce operating costs and improve revenue to achieve its overall profitability goals for the year.

“Bach Hoa Xanh will focus on improving the performance of perishable goods sales and reducing in-store selling costs. Additionally, we will continue to enhance our revenue. Over the next five years, we aim to bring our net profit margin to the industry average for the region”, Mr. Trong added.

“We have not yet met to determine a clear plan for store expansion, but we are prepared with the formula for new openings and a human resources development strategy to embrace the goals set by the Board of Directors”, Mr. Trong stated.