RETAILING IN VIETNAM PROSPECT FOR A JAPANESE INVESTOR (BÁO CÁO PHÂN TÍCH THỊ TRƯỜNG BÁN LẺ VIỆT NAM CƠ HỘI ĐẦU TƯ) bản tiếng anh Contents 01. EXECUTIVE SUMMARY 02. VIETNAM LANDSCAPE RETAIL POTENTAIL Market economic growth Golden demographics Retail overview Retail segments Postcovid agendas for retailers 03. MARKET CHALLENGES Local market limitations Case study: Bibo Mart Case study: BRG Mart Japanese Investor in readiness for Vietnam 04. PROPOSED MARKET ENTRY PIPELINE
RETAILING IN VIETNAM & PROSPECT FOR A JAPANESE INVESTOR © N g u yễ n T h ị P h n g Tr i n h – 2 CONTENTS 01 02 03 04 EXECUTIVE SUMMARY VIETNAM LANDSCAPE & RETAIL POTENTAIL MARKET CHALLENGES PROPOSED MARKET ENTRY PIPELINE ‒ Market economic growth ‒ Local market limitations ‒ Golden demographics ‒ Case study: Bibo Mart ‒ Retail overview ‒ Case study: BRG Mart ‒ Retail segments ‒ Japanese Investor in readiness ‒ Post-covid agendas f or retailers f or Vietnam 01 EXECUTIVE SUMMARY © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 EXECUTIVE SUMMARY Unique opportunity to invest in one of the fastest growing retail market in Asia Pacific as well as one of the most resilient economies globally in recovery • Being through three decades of economic reform, Vietnam has been emerging as one of the most dynamic markets in the Southeast Asia region Even the Covid-19 pandemic has drastically changed the global economy and supply chain as a whole as well as consumption demand, early and decisive COVID-19 containment efforts of Vietnamese government has strengthened the expectation of the country remaining one of the fastest-growing economies among regional nations On the back of strong and resilient economic fundamentals, Vietnamese consumers are also amongst the most optimistic despite the onset of the global pandemic • The pandemic has resulted in social distancing across Vietnam, changing people’s shopping habits then affecting business’s strategies From retail sector perspective, products that were once basic needs have now become priority in shopping basket Delivery services are now highly demanded to reduce physical contact and in-person interaction • Retailing players’ mindset was inevitably shifted Forgoing levels of sophistication, value propositions and brand associations, retailers directed their focus on safety aspects, physical interaction minimization and digital integration maximization, which has in turn resulted in accelerating omnichannel purchasing behaviors when e-commerce sites are increasingly used as an alternative for physical shopping channels Moving from convenience to safety, from cost to simple availability, and from wants to basic needs, those significant shifts are likely to become permanent changes in the future that lies ahead • We hope that this report will provide you with some insights into the current Vietnam economic situation, consumer experience and major challenges to local retailers, and the considerations to leverage the market’s accelerating momentum, then thriving in the new normal © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 02 VN LANDSCAPE & RETAIL POTENTAIL Market economic growth Golden demographics Retail overview Retail segments Post-covid agendas for retailers © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 ECONOMIC OUTLOOK DURING COVID • • • • Over the last decade, Vietnam has been able to maintain a consistent economic momentum, experiencing consecutive years with increasing rates of over 6% since 2010 The country’s main contributor to GDP is private consumption, which is significantly fueled by large and growing middle class It is estimated to reach about 17 million middle class households by 2030, making Vietnam the third largest urban market in terms of consumer numbers and fifth largest in terms of total spending in Southeast Asia by 2030 Despite the global economic slowdown owing to COVID-19 outbreak, Vietnam is forecasted to be among the fastest growing countries in Southeast Asia and the fifth globally this year thanks to early and decisive containment efforts, as well as robust and resilient economic fundamentals The country is expected to deliver positive growth of 2.8% in 2020 – a sharp decline from 7.02% in 2019 In first nine months of 2020, the economic growth was estimated at 2.12%, the lowest 9month rate in the past 10 years, yet, Vietnam is one of the few economies in the world not facing a contraction this year In term of economy structure, agri-forestry & fishery sector accounted for 14.05%; industry & construction - 33.16%; the service sector - 42.73% During this period, domestic consumption and exports are key drivers for the country’s economy, expanding by 4.6% month-on-month Strong growth was recorded in domestic production and basic necessities, including pharmacy, paper, chemical, construction material Some industries were severely impacted, especially transportation, tourism & accommodation In medium-to-long-term, Vietnam is likely to continue its economic revival, with public spending to be raised and capital markets to be strengthened further Moreover, the resume in operation of Chinese manufacturing hubs, ease of global supply chain and restoration of overseas markets would enable Vietnam to engage in numerous trade agreements, helping its economy rebound Source: Worldbank 2020, General Statistics Office of Vietnam 2020, Euromonitor International 2019 Developing East Asia & Pacific: historical GDP growth & baseline projections Baseline forecast 2019 2020F 2021F Developing EAP 5.8% 0.9% 7.4% Developing ASEAN 4.8% –3.5% 5.1% China 6.1% 2.0% 7.9% Indonesia 5.0% -1.6% 4.4% Malaysia 4.3% -4.9% 6.3% Philippines 6.0% -6.9% 5.3% Thailand 2.4% -8.3% 4.9% Vietnam 7.0% 2.8% 6.8% Myanmar 6.8% 0.5% 5.9% © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 VIETNAM GOLDEN DEMOGRAPHICS • • • • • Vietnam is experiencing rapid demographic and social change The country’s population rose from about 60 million in 1986 up to 96.5 million in 2019 and is expected to expand to 106 million by 2030 The growing population is influenced by various factors such as a relatively high birth rate and increasing life expectancy which help to minimize the effects of negative net migration By 2030, most Vietnamese are projected to remain living rural areas even though the urban population increasing rate is three times higher than the rate of total population growth during the period of 2017-2030 Average monthly income per capita in Vietnam by region (USD) Urban Cities 300 It is estimated that as of 2019, 70% of the population is under 35 years of age, having an average life expectancy of 76 years - the highest among countries in the region at the same income levels Currently, Vietnam has reached the peak of its “golden population” stage and is going to enter the aging period rapidly due to the long-standing transition from extended family to nuclear family model 200 Vietnamese are enjoying higher income level with disposable income increasing by on average 9.1% each year and being forecast to reach USD 2,494 per capita by 2021 thank to steady economic growth Vietnam’s middle class population is growing currently at 10% - the fastest rate in Southeast Asia The number of middle class Vietnamese is likely to reach 44 million by 2020, accounting for 13% of the population and expected to reach 95 million by 2030, making up half the population Rural Due to smaller household size, larger gross income, as well as rising urbanization, wealthier households pose strong domestic demand & consumption As compared to the region, Vietnam has the second lowest saving ratio (just slightly above Philippines) The majority of income is contributed to consumer spending, from especially youngsters possessing high consumer power 100 Source: Kantar — Insight Handbook 2020, Worldbank 2020, BMI Global 2020 355 400 186 112 100 2012 2018 2025F 400 300 186 200 56 95 2012 2018 2025F © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 RETAIL MARKET OVERVIEW • W ith ongoing urbanization and evolving demand trends amongst young urban consumers, Vietnam is witnessing strong growth in retail sector with successive CAGR of 8.4% during the last five-year period to reach sales value of USD 109.7 billion by 2019 • W ith the COVID-19 outbreak in 2020, domestic demand for consumer goods reported its lowest growth rate since 2014 at 9.8% for the first two months, as compared to 14.4% for the same period last year Nevertheless, the Vietnamese consumer sentiment remains optimistic despite the pandemic - the country’s consumers being among the most optimistic globally • • • In 2019, store-based sales continued to account for about 97% of retail sales, and the rest 3% was contributed by non-store-based channels (including e-commerce) The disruption of 2020 followed a reduction in foot traffic of about 80% in Ho Chi Minh Cit y and Hanoi, yet created an opportunity for e-commerce players such as Tiki, Shopee, Lazada, Foody and Now, which most reported operating at full capacity and expanding their product ranges to capture growing demand during the lockdown In the first eight months of 2020, only retail experienced positive growth among all the service sectors Retail sales reached USD 21.78 billion, increasing by 8.3% as compared to the same period of last year The Covid-19’s impact also backed the packaged food sector to enjoy double digit growth rate of 26% in the past three quarters, making it the leading sector in FMCG market The number is projected to grow by 16% in post-Covid-19 phase In short-term, Vietnam retail market could continue be slow down as consumers might delay purchases However, long-term prospects are highly considered with overall rising consumer purchasing power, upmarket trend across many product categories, and improved retail infrastructure Source: Euromonitor International 2020, Vietnam Insider 2020, Kantar Worldpanel Division 2020 Sales in Retailing in Vietnam 2014 - 2024 (USD bn) 160 131.2 140 120 109.7 115.0 120.4 125.8 136.7 5 100 80 73.4 60 107 40 112 117 122 127 132 72 20 2014 2019 2020F2021F2022F2023F2024F Store-based Retailing Non-Store Retailing © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 DYNAMIC RETAIL SEGMENTS • Covid-19 has changed local people’s priorities in consuming: from “convenience” to “safety”, from “cost” to “simple availability ”, from “wants” to “basic needs” This has set the opportunity for retailers to quickly expand and promote omnichannel retailing strategies • Covid-19 has changed local people’s priorities in consuming: from “convenience” to “safety”, from “cost” to “simple availability ”, from “wants” to “basic needs” This has set the opportunity for retailers to quickly expand and promote omnichannel retailing strategies • Despite rapid expansion of modern stores, traditional grocery retailers still outnumber in sales value and outlet distribution Even for many rural and lower-income urban buyers needing daily budget for food and small basket, traditional retailers, like local markets and mom-and-pop stores, are a accessible and affordable option • Despite rapid expansion of modern stores, traditional grocery retailers still outnumber in sales value and outlet distribution Even for many rural and lower-income urban buyers needing daily budget for food and small basket, traditional retailers, like local markets and mom-and-pop stores, are a accessible and affordable option • Convenience stores, otherwise, differentiate themselves from traditional retailers with a more trendy assortment, modern facilities and digital payment methods, which are much appealing to young urban consumers • Convenience stores, otherwise, differentiate themselves from traditional retailers with a more trendy assortment, modern facilities and digital payment methods, which are much appealing to young urban consumers Sales Projections by Retail Channel 2019 – 2024 (USD bn) 60 20 3.7 4.5 '19 '24F '19 '24F 2.5 4.2 '19 '24F Convenience stores Hypermarkets & supermarkets '19 '24F Traditional Grocers Hypermarkets & supermarkets, 3,508 156,346 40 0.3 Convenience stores, 1,289 Mixed retailers, 246 44.4 48.4 0.2 Luxury retailers, 30 E-Commerce Retail Outlets by Channel - 2019 Convenience stores Hypermarkets & supermarkets 828,125 outlets in total 666,736 Traditional Grocers Non-grocery specialists Mixed retailers Luxury retailers Source: Euromonitor International 2020, Deloitte 2020 DYNAMIC RETAIL SEGMENTS • Making up only 2% of the total retail market (compared with 14% in the US and China), Vietnam e-commerce is still posing high degree of attractiveness to both local and foreign players • Vietnamese are inclined to buy groceries online more than consumers in other ASEAN markets Especially during the COVID-19 outbreak, large number of Vietnamese consumers who had earlier not been interested in online grocery shopping and e-payments have necessarily become first-time online shoppers when following social distancing guidelines In the first six months of 2020, the e-commerce sites saw 42% increase in traffic in grocery & fresh food category, which are normally not key products for the e-commerce sector • In first half of 2020, Vietnamese online shoppers spent on average USD 14.8 per order, increasing by 31% as compared to figure in same period of last year of USD 11.3 The basket mix still mostly contained fashion products (39%), electronics & media products (25%), and health & beauty (22%) in the period (cont.) Traffic of e-commerce websites by categories before & after Covid-19 42.0% 7000000 21.0% 0.5 8.7% 0.2% -6.0% 6000000 5,039,34 -38.0% 5000000 -0.5 4,092,08 3,114,48 4000000 -1 3000000 -1.5 1,953,45 2000000 Source: iPrice Group, SimilarWeb and App Annie, targeted company websites -2 1000000 -2.5 469,864 313,552 National top 50 average Fashion Household electronics -3 Smart device Grocery Even in the context of decreasing purchasing power, the fact that Vietnamese still spend more on online shopping is a good sign for the market to witness a shift from offline to online shopping The habits that many Vietnamese first-time shoppers have picked up during the COVID-19 period are expected to emerge as permanent changes that both modern, traditional and e-commerce players need to response to For instance, Japanese retail giant Aeon mall has promoted their digital transformation by expanding e-commerce platform – AeonEshop and promoting cashless shopping services while ensuring food hygiene, quick delivery and convenience for customers during Covid-19 time Big C supermarket chain in southern Vietnam reported 3000 online orders in March, up 1000 from the previous month Ride-hailing player Grab launched its grocery e-commerce platform, GrabMart, on March 2020, revealing surging orders of daily essentials Health & beauty • Monthly traffic in last months of 2019 Monthly traffic in first months of 2020 % growth © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 10 POST-COVID AGENDAS for RETAILERS Future industry trends Rapid shift to online consumption behavior Consumers Raising of new businesses/ products/ services • In response to changes in consumer behavior and to the “new behavior patterns” backed by the government guidance on social distancing and contactless interactions, Vietnam retail industry has to act unceasingly and decisively The rising new role of physical stores is expected to be integrated with the online purchasing process, which emphasizes the trend toward the online-merge-offline (OMO) model • Removing the traditional sales method, retailers are necessary to rethink and re-design the whole new consumer purchasing f low line, then identify the role of physical stores as a component of that flow and blend the online and in-store experience For instance: Online merge with offline (OMO) shifts into high gear - Consumption more active online - Physical stores as supplemental to online stores Post-covid management agenda ❶ Establishment of a new business model that supports new-normal consumers Understand the points of change in consumer purchasing flow lines Re-design online-based purchasing flow/ channels Re-design the role played by real stores Source: ABeam Consulting 2020 ▪ ▪ ▪ Fast f ood operations such as McDonald's and caf es have eff ectively implemented Buy online, pick -up in store (BOPIS) method Seven-Eleven is par tnering with insurance company MS&AD Insurance Group Holdings to sell lif e insurance wit h the process of register ing at home or through mult i-f unction machines at stores, then payi ng the f ee at the cashier Dark stores - tradit ional retail stores that have been converted to local f ulf illment centers to serve online – are providing the benef it of being located close to population centers for rapid delivery and utilizing physical space © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 11 POST-COVID AGENDAS for RETAILERS (cont.) Future industry trends Constant actions taken in adjustment to the “new normal” lifestyle Stores Create stores safe and secure for customers and employees - From hastily – constructed measures to drastic/ permanent response - Focus on self-checkout/ contactless terminals and manpower reduction • After determining the customers and operational flow as well as the implements and store equipment & consumables, retailers have to figure out the layout and operation to new lifestyles By evaluating current store situation and identifying possible issue, retail developers would suggest possible layout options and measures to ensure social distancing between customers and to prevent droplet infection around cash registers • Safety for store staff also has to be taken into consideration so that they can work without undue worries about the surrounding environment Contactless service combined with new layout designed for new behavior patterns and proper store operation would ultimately help retailers to differentiate themselves, achieve store safety and security, and at the same time increasing employee loyalty while a labor shortage is expected to remain an issue after the pandemic • In the medium term, employee sharing will probably continue to be one of the key topics of the industry Store operators undergoing major store reforms have to identify operational requirements and necessary skill set for their employees Human resources sharing common throughout the industry - Change policy from hiring and educating in-house to securing outsourced human resources with required skills Post-covid management agenda ❷ Creating stores that support “new lifestyles and patterns” Assess the safety and security status of stores Formulate and implement a roadmap for realizing contactless stores Assure human resources and redefine their role and requirements Source: ABeam Consulting 2020 © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 12 POST-COVID AGENDAS for RETAILERS (cont.) Future industry trends Closer relationships as partners in business continuity suppliers Increased joint business continuity planning discussion as a business partner - Build closer relationships for business continuity in case of emergency - Increase supply chain rebuilding, including inventory information linkage for stable supply • The disruption in the global supply chain have had a significant impact on the retail industry China's manufacturing industry became immobilized, causing supply shortages and temporary production stoppages in downstream facilities around the world Limited trading activities at ports and airports of the main gateway have made warehouses and means of transport serving supply chain remain stagnant Therefore, Vietnamese retailers are struggling to continue to operate under supply chain constraints • As to retail companies, business continuity is the key survival factor, product & service suppliers are indeed their business partners in need During this pandemic period, the analysis on events and responsive measures in correspondence to the flow of goods and information in the supply chain should be carefully taken to protect the company in vulnerable situations This raises the importance of close business relationships • It is vital to involve business partners in frequent discussions regarding business continuity planning aimed at keeping business running as an essential lifeline A trend toward mutual evaluation of each other ’s value is likely to emerge since partners making it possible to continue business together Post-covid management agenda ❸ re-examination of business continuity plans involving business partners Examine the ideal means of business continuity planning Implement digital supply chain management reforms such as sales status/ stock status coordination Source: ABeam Consulting 2020 © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 13 03 MARKET CHALLENGES Local market limitations Case study: Bibo Mart Case study: BRG Mart Japanese Investor in readiness for Vietnam © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 LOCAL MARKET LIMITATIONS • • • • Vietnam retail companies are exposed to a lot of major challenges, which are fundamentally originated from: the lack of resources (including financial, technology and human resources); the barriers in corporate culture which are closely related to the traditional economy; data gaps (including reports, analysis of information); leader vision; and etc A series of businesses are forced to shut down during the Covid-19 outbreak Yet, the pandemic has inadvertently been driving a transformation in retail business operation, which had not been received enough attention before Businesses of all sizes are subject to the shift towards new purchasing lifestyle - omnichannel behaviors, which then emphasizes the importance of technology application in all aspects of the retail industry, including logistics, finance, quality control, payment, customer service and interaction The realization of digital transformation requires the management team to step out of their old way of working, including mindset, approach and application The lack of well-built and managed standards, inconsistencies in operational activities, as well as slow response to new skill requirements and new scope of works might threaten the company to fully utilize benefits of digital transformation Changing in equipment, production lines, management systems, training systems and human requirements are all crucial for sustainable transformation However, applying business transformation costs huge investment to Vietnamese business in the context of not many solution and outsourcing suppliers available in the market This poses the need for more professional retail consulting service providers to assess the internal competences of the business in order to allocate resources properly when implementing the strategies to adapt, change, and innovate practices in the new normal Source: analyst's compilation Some major weaknesses of Vietnamese retailers Limited experience in digital transformation Insufficient effort to optimize customer experience Lack of well-trained operating employees Hesitation in updating operating procedures Lack of local outsourcing suppliers © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 15 CASE STUDY: BIBO MART General information Establishment date 2006 • Under the management of Bibo Mart TM Joint Stock Company, Bibo Mart Mom & Baby store chain specializes in providing products for mothers (during pregnancy and postpartum period) and babies (aged ~ 6) After 14 years of operation, the company has achieved a database of 80,000 mothers Business field Its outlet network is widely spread in 22 provinces across the country In two main cities of Vietnam, Hanoi and Ho Chi Minh City, Bibo Mart owns a lot of strategic locations in central districts Store format Being an importer and direct distributor of high-end baby products from Combi, Chicco, Fisher-price, Farlin, Hipp, DrBrown, etc., Bibo Mart has expanded its business by working with OEM and ODM partners to develop its own private label products E-commerce website • W ith more than 15,000 SKUs, its diverse offerings have made Bibo Mart stood out among its competitors Total: 137 • In late 2019, Bibo Mart officially released Bibo Mart App and Virtual Store - Bibo Mart 4.0 – the first virtual mom and baby store in Vietnam – simulating many product groups and shown in large format images same as physical stores and providing scan and buy features in order to help customers to have a faster and easier shopping experience at Bibo Mart stores • • Source: analyst's compilation, company webites Mom and baby product retailing & wholesaling Independent store No of outlets by Dec 2020 HCMC: 48 Hanoi: 45 Other provinces: 44 Estimated annual revenue ~ USD 700,000 per store © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 16 CASE STUDY: BIBO MART (cont.) During the period of 2009-2014, its retail chain system encountered three major obstacles including: employee, finance, management system Human resources • The Company found it hard to find qualified, well-trained and ready-to-work staff due to the scarcity of retail training schools or retail vocational training systems to provide sales staff for the industry Therefore, the Company then recruited retail experts to provide adequate training for their employees • The Company also expressed its problem dealing with periodic stock take for more than 150,000 SKUs in nearly 150 physical outlets • In management level, Bibo Mart actively sent their team to go abroad to learn and reference successful models around the world However, it had difficulty in finding execution personnel Finance • In June 2017, through ACA Investments, Japan’s leading fund management company, Sumitomo completed the purchase of a 20% stake in Bibo Mart to take its available advantages to become the dominant baby and mom retailer in Vietnam Management system • After reaching relatively 100 stores by the end of 2016, Bibo Mart quickly started to apply digital transformation model for years, then implemented the data driven model in 2019 to handle their growing customer base as well as larger scale of operation • The team’ve been researching and applying a lot of techniques customers such as: Automation, One touch - Scan & Buy, Big Data, Subscription, IoT & AI to bring a true omnichannel experience to consumers while improving its storage management and order fulfillment operations Source: analyst's compilation, company webites © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 17 CASE STUDY: BIBO MART General information Establishment date Intimex: 1979 • • • • On October 2020, BRG Retail Company Limited (BRG Retail) announced its merging of Intimex, Hapromart, Seikamart supermarkets into BRGMart supermarket system and promoting new Haprofood minimart in BRGMart chain Each destination emphasizes on different category focus, such as: ▪ Intimex – providing fresh food and pre-prepared meals ▪ Hapromart – focusing on agricultural products and local specialities ▪ Seikamart – leading in importing Japanese food and consumer products The BGR Mart chain aims to create a modern system and unified identification for its outlets and maintain the rich in category mix, convenience and improve customer services The chain also provides products directly produced by BRG Group members such as Dong Thap Hapro rice; Thuy Ta ice cream, purified water and other regional specialties The Company introduced new membership program with BRG Elite card to receive incentives such as 2% direct discount when shopping at BRGMart supermarkets, and minimarts In mid 2020, the new e-commerce website – BRGshopping.vn and mobile application marked its online presence Source: analyst's compilation, company webites Seikamart: 1998 HaproMart and HaproFood: 2005 Business field Grocery retailing Store format Supermarket Minimart E-commerce website No of outlets by Dec 2020 52 outlets in North of Vietnam Revenue growth 25% in first 10 months of 2020 © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 18 CASE STUDY: BRG MART (cont.) Retail expertise • Being rooted from a real estate group, BRG Retail showed many limitations in retail management and operation • HaproMart and HaproFood's distribution system consists of many outlets in small area, degraded facilities The qualifications of managers and staff are still limited, slow to adapt to the requirements of the new mechanism • Intimex supermarket has poor category mix with less effective merchandise planning, which in turn creates low customer experience as well as customer interactions with products and services in stores Local insights • Since their establishment in late 80s, all of BGR Mart outlets are still located in northern provinces of Vietnam, which shows their hesitation in entering southern market where there are a lot of modern and active players, such as Aeon, Vinmart, Cirlcle K, etc • Further market penetration requires significant insights into the targeted local consumers in that region, especially dynamic, young and connected consumers Human resources • Most of their supermarkets are used to be state-owned companies This hinders great barriers in corporate culture which are closely related to the traditional economy, as well as a threat to the company’s flexibility and adaptability to new purchasing lifestyle - omnichannel experience and digital transformation need Source: analyst's compilation, company webites © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 19 THE JAPANESE INVESTOR ’s key strengths THE JAPANESE INVESTOR in READINESS for VIETNAM • • • 20 Large and small retailing companies in Vietnam are revising and adjusting their strategies in response to changes in consumer behaviors, supply chain network and even internal management, in the hope of emerging stronger after the pandemic This, therefore, represents prominent role of the consultants and strategists in assisting retailers to identify their competences and weaknesses in all aspects of business operation and to foresee possible opportunities in an extensive and thorough manner Especially for small businesses with limited financial capabilities, practical consulting support in operational activities such as optimizing available human resources, revising category mix, re-designing store layout, would propose appropriate practices then identify prioritized actions Additional effort from retail experts and consultants would create useful and professional instructional materials in getting greater picture about the postcovid 19 circumstances; balancing potential benefits and effort required to achieve those; developing a results-oriented environment and evaluating performance; or just maintaining day-to-day business © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 Personnel training Using exclusive curriculum for training programs from reception to intensive training Management capabilities Managing and leading operational activities in various specialized fields Rich operational experience Having extensive operating experience in diverse industries and business sizes 04 PROPOSED MARKET ENTRY PIPELINE © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 © Nguyễn Thị Phương Trinh | Slide Retailing in Vietnam (Thị trường Bán lẻ Việt Nam) | 12.2020 Provide bespoke solutions designed to local clients to uncover active opportunities & to promote the essence of sustainable development Stage Purpose Service offered Launch date Market Identification 22 ROUTE-TO-MARKET APPROACH Market Prioritization Growth Strategies Who is our client? How they perform? Which segment to choose? How to grow the targeted segment? - Training pack for senior executives of local retailers - Training pack retail sales staff - Retail audit for standard clients - Operation audit for selective clients - Training pack - Full retail support pack for premium clients - Retail audit - Operation audit - Training pack 1st year 2nd year 4th year TRÂN TRỌNG CÁM ƠN NGUYỄN THỊ PHƯƠNG TRINH (84)842792779 (Zalo/Whatsapp) trinh.tpn@gmail.com