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Metro chief discusses VN retail prospects
The Vietnamese retail market is changing rapidly with the entry of many foreign players. Viet Nam News speaks with Philippe Bacac, chairman and managing director of Metro Cash & Carry Viet Nam, to find out about the German wholesaler's operations in the country and prospects for its retail market.
Your company has been in Viet Nam for years. What do you think about the potential of the Vietnamese retail market?
Viet Nam's retail sector has big potential primarily because of its population. The country's population has now reached 90 million and is growing by 1 million a year. Moreover, modern trade penetration is still less than 30 per cent while it exceeds 70 per cent in European countries like France or Germany.
The Vietnamese economy has encountered difficulties in the past few years including a decline in consumer demand. Did these impact supermarkets in 2013? Do you expect improved business in 2014?
The past years have been tough for Viet Nam's economy and it has also impacted some customer groups, particularly small and medium enterprises, causing some challenges for us. It was reflected through their reduced confidence and spending.
In 2014 we will further progress towards our ambition to be the first choice of our professional customers. Besides, we will continue to invest in developing a sustainable supply chain and providing farmers with training.
How has your company, as a leading international wholesaler, contributed to the development of modern trade infrastructure in Viet Nam?
With its concept designed to help professional customers operate their business successfully, we bring benefits to both local suppliers and producers as well as to independent small and medium-sized businesses.
We not only buy directly from local farmers, producers, and manufacturers, but also help them improve quality standards, food safety, and hygiene.
Efficient supply chain management generates economic growth as, at one end, local farmers and producers get direct access to the market and, at the other, customers get stable supply of high-quality goods at competitive prices.
Our fish platform in the Mekong Delta and our fruits and vegetables platform in Central Highland Lam Dong Province are two good examples of this achievement. Currently over 95 per cent of the products sold in our stores here are sourced in Viet Nam.
Food safety and hygiene are major concerns at the moment. What does your company do to ensure its products are safe?
We see quality assurance as one of the business priorities in our operations. Metro's outstanding track record in quality makes us a trustworthy and preferred business partner for our professional customers.
It is sustained through the consistent implementation of advanced quality standards such as Hazard Analysis and Critical Control Point (HACCP) that safeguard every step of the supply chain.
As a wholesaler trading a large volume of fresh produce on a daily basis, an uninterrupted cold chain is of the utmost importance and is maintained with temperature-controlled transport vehicles and storage facilities.
Our stringent quality control is also widely exercised by our cooperation with suppliers whose products and production processes are required to meet specific standards defined by a wide range of globally applicable regulations and inspection systems such as Global GAP.
In Viet Nam, we have invested substantially to organise a series of training seminars to transfer food safety know-how to the local producers and suppliers. We have provided training courses on good agricultural practices to over 20,000 farmers and fishermen.
You buy from many local suppliers. Do you export some of these goods to other countries where you operate?
Wherever we invest, we explore the opportunities of exporting products to our international sales channel network. For instance we are a major exporter of pangasius and seafood and invested heavily in the past to make suppliers we work with fit for export. This has been acknowledged by the Vietnamese Government.
International experience has shown that with the expansion of our system, local suppliers get comfortable with our requirements and are able to improve quality and packaging standards.
Since 2006 we have played a role of intermediary to enhance Vietnamese exports to foreign markets around the globe via our network.
Last year we purchased more than US$6 million worth of food produced in Viet Nam directly from Vietnamese suppliers and distributed it to our stores around the globe. Key products are seafood and fruits.
In 2014 we are planning to source over $12 million worth of food products. On top of that we are also sourcing over $39 million of non-food products from Viet Nam.
The retail market will be thrown open in 2015. What are your predictions for the market at that time? Is Metro ready for it and how does it plan to compete with other domestic and foreign retailers?
Despite its strong growth potential, the retail market is impacted by a sluggish economy and fast growing competition, which will get even stronger from 2015 onwards.
There are many people to "eat the same cake" and only the best companies will succeed and survive over time. Having said that, several major retailers are delaying their entry into Viet Nam or reducing their investments in favour of other countries in the region whose economy is performing better.
Whilst the government has achieved much in terms of controlling inflation, it is clear that there are issues which need to be resolved. Metro remains positive about the medium-term development of Viet Nam, but is concerned by the constant changes in laws and regulations and the variations in interpreting them at different levels.
Metro Cash & Carry's business concept is unique. With our wholesale model and focus on professional customers we are moving away from this retail war between domestic and foreign retailers. We are actually supporting small and mid-sized retailers. Mom-and-pop shops, minimarts, and other small retailers belong to our core customer groups. They get a lot of advantages through our wholesale concept.
We clearly strengthen the competitiveness of those small and mid-sized retailers and will help them survive and prosper despite the densification of modern trade.