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Convenience shop popularity threatens local supermarkets

2013-06-06 10:24:21

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Convenience shops in HCM City are giving traditional markets and even supermarkets a run for their money as they become more popular with local residents.

Le Ngoc Dao, deputy director of the city's Department of the Industry and Trade, told online newspaper VnExpress.net that convenience shops had many advantages including clearly stated labels on the origin of food and products, a top consumer concern.

Their prime locations, often near local areas or industrial and processing zones, have also contributed to their popularity.

Because of the proximity to their homes or jobs, many customers say the shops help them save money and time. In addition, a diversity of goods can be found at the shops.

The shops are especially useful in rainy weather and on days of high tides when roads may be flooded, according to a resident in District 7.

Dao said the shops also offer vehicle parking, are cleaner than traditional markets, and require no bargaining. Some of them deliver goods to customers' doors.

To investors, convenience shops have been a good choice in time of recession.

A trader at one supermarket, who spoke on condition of anonymity, conceded that a supermarket could bring high profits, but noted that the initial investment of about VND50 billion (US$2.3 million) was high, and that profits came only five years after opening.

In contrast, it takes only VND2-4 billion ($95,000-190,000) to open a convenience shop, and profits come after only one year.

Dao said that HCM City authorities were encouraging companies to develop convenience shops in rural areas, and limit their development in the city centre.

She said the city was also developing standards for these kind of shops, and would submit the guidelines to the Ministry of Industry and Trade for approval.

She said that one of the standards would possibly require that each shop be at least 150sq.m and sell about 2,000 products.

Products sold at convenience stores vary from shop to shop.

Currently, HCM City has about 475 convenience shops, including brands like Family Mart, B&B, Circle K, Day–Night and New Cho.

About 40 companies have invested in these shops, which are relatively new to the country. Seventy to 80 per cent of products sold at the shops are made in Viet Nam.