Vietnam takes to convenience stores

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Customers purchase a variety of goods from a Shop&Go convenience store in Ho Chi Minh City

Uncomfortable with the throngs and uneasy about the dubious origins of food at traditional markets, Le Thu Trang, an accountant at a trading company in Hanoi, often buys groceries and fast food from convenience stores.

She says: "The quality of products here are guaranteed, while their prices are reasonable, not higher than at grocery stores.

"I no longer buy what I need from grocery stores since convenience stores opened a few years ago."

She was buying noodles, hotdogs, beverages, shampoos, and tissues at one such store on Hanoi's Phu Doan Street when she spoke to Vietweek

Trang is among a growing number of people who are opting for convenience stores instead of grocery shops and traditional markets for their shopping.

With the economic gloom yet to lift but rents remaining high, retailers are focused more on opening convenience stores, which sell relatively inexpensive products and require less space and less expensive locations compared to those selling luxury goods.

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They are becoming increasingly popular, especially with students and housewives.

According to a research published by market research firm Kantar Worldpanel in July, the number of modern mini stores in Vietnam, including "mini-marts" and convenience stores, was 74 percent higher than in the same period the previous year.

Japanese retailer FamilyMart opened an outlet in Ho Chi Minh City in late July after a brief hiatus due to a change in local business partners. That demonstrated that the Japanese retailer does not intend to quit Vietnam as was rumored after it pulled out of a joint venture with local distribution and retail firm Phu Thai Group JSC.

Kigure Takehiko, CEO of FamilyMart Vietnam Ltd., said his firm plans to open 20 stores in HCMC this year and expand into Hanoi next year.

Considering Vietnam's young population, there is great potential for the convenience-store sector, adding that FamilyMart targets customers aged 15-30.

HCMC is the country's convenience-store hub with over 150 of them, which remain open for 18 hours or more per day.

The figure is 15,000 for Japan and 700 for Thailand.

Circle K, which opened the first convenience store in Vietnam in 2008, now has 40 outlets, all of them open 24 hours a day and seven days a week.

Besides these foreign players, local retailers have also been opening convenience stores. Saigon Co.op, which operates the Co.opmart supermarket chain, has opened 62 of them under the Coop Food brand in the last five years. Satra has opened 20.

Kantar Worldpanel said mini-marts like Coop Food and New Cho offer modern, supermarket-like services but are much smaller and therefore it is easier to open more of them faster. Some two or three stores are opening every month.

In 2010 only around 10 percent of urban households purchased fast moving consumer goods (FMCG) in mini-stores. Now 20 percent shop for FMCG in mini-stores at least once a year and spend VND90,000 ($4.3) per trip on average, it said.

"In the next 10 years every urban household is expected to shop from a mini-store, either mini-market or convenience store, at least once a year," David Anjoubault, general manager of Kantar Worldpanel Vietnam, said.

A Hanoi retail executive, who asked not to be named, said it is easy to open a convenience store since it requires a mere 50-200 square meters of land and little capital. An investment of just a few hundreds of millions of dong (VND100 million = $4,750) is enough for opening a store with 1,000-2,000 items, it said.

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