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The Retail Giant Captures Market Share on the Precipice of a New Era

18 December, 2024

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Bach Hoa Xanh, the mini-grocery supermarket chain under The Gioi Di Dong retail group (HOSE: MWG), is experiencing a bustling end to the year. With the peak shopping season upon them, they are also embarking on a mission to restart their store expansion into multiple provinces.

“We are now capable of doing so as we have the resources after a challenging period (from late 2022),” shared MWG Chairman, Mr. Nguyen Duc Tai, during a periodic meeting in November.

Having just turned profitable and secured investment from foreign funds, the supermarket chain aims to open an additional 100-200 stores by 2025 to reach new customers in emerging areas. This expansion comes after nearly two years of focusing on improving profitability.

Following a dull period, domestic purchasing power is beginning to recover, although experts assess it is still slow. However, according to World Data Lab, Vietnam’s per capita income is among the fastest-growing in the world. The middle-class consumer group (spending a minimum of $12/day) currently accounts for 17% of the population and is projected to reach 26% by 2026. This trend presents an attractive prospect for the retail sector.

Younger consumers are also on the rise, signifying a growing emphasis on shopping experiences and convenience compared to previous generations.

The vast potential for retailers lies in the highly fragmented market, with traditional channels such as markets and grocery stores still holding over 85% market share in 2023, as per FPTS Research. The MWG Chairman also noted that their supermarket chain remains young and small-scale relative to the market size, hence the continued expansion is a critical goal.

Bach Hoa Xanh staff cashiering for customers

After restructuring their system of 1,700 stores across 25 provinces from Khanh Hoa onwards, Bach Hoa Xanh commenced inaugurating its first stores in Da Nang, Quang Nam, and Quang Ngai in November. They are also considering a pilot launch in the North. This strategic shift is noteworthy, as the chain was previously focused solely on downsizing and enhancing the efficiency of existing stores.

Wincommerce, the managing company of Winmart, Winmart+, and WIN, has been averaging a new store opening every two days in the third quarter. In mid-August, they announced an intensified expansion plan, aiming to potentially open a new store every day.

The comprehensive multi-channel strategic model, combined with an enhanced shopping experience, is attracting customers away from traditional markets, according to the analysis of Tien Phong Securities (TPS) Research.

Japanese general merchandise retailer AEON MALL is diversifying its models to reach more Vietnamese consumers. This year, they opened additional small-scale supermarkets within external shopping malls like Crescent Mall in District 7 and Parc Mall in District 8, Ho Chi Minh City.

The transformation is not limited to big cities; consumer markets in provinces and suburban areas are also witnessing significant changes. Shopping malls and supermarkets of foreign retailers are popping up continuously.

Thai conglomerate Central Retail inaugurated GO! in Bac Lieu in November and plans to welcome Christmas shoppers at GO! Ninh Thuan, which is currently undergoing completion. Meanwhile, AEON MALL opened its first shopping mall in Central Vietnam in September 2024, spanning four floors with a rental area of 51,000 sqm in Hue.

Both conglomerates mentioned above have a real estate development orientation for commercial leasing, accompanied by the placement of their namesake supermarkets (AEON and GO!) within these spaces. Their approach is opening up new opportunities for brands to reach consumers in emerging markets by concentrating foot traffic and providing business premises.

AEON MALL Hue, opened in September 2024, attracted approximately 140 brands to set up businesses, with 70% being new to the local market.

“Very few competitors are engaging in developing large-scale shopping malls in Vietnam’s suburbs. As a result, our AEON MALL locations are highly recognizable, and we gain a competitive advantage from our spatial superiority,” AEON MALL stated in a report released in late November. They have a series of upcoming projects in Long An, Da Nang, Thanh Hoa, and even Ha Long and Bac Giang.

In contrast, Central Retail is increasing its presence in less economically developed areas through its mini-supermarket chain, go!. With floor areas ranging from 1,500 to 3,000 sqm, these locations not only offer shopping but also integrate play areas and eateries like KFC and Pizza Hut.

During the year-end festive season leading up to the Lunar New Year, the Thai retailer plans to operate three additional mini-go! stores in Huong Tra Town, Hue, and district-level markets in Dong Thap and Binh Phuoc provinces.