(Tiểu luận) project report vincom mega mall royal city rejuvenate the future of retail experience

VIETNAM MARITIME UNIVERSITY INTERNATIONAL SCHOOL OF EDUCATION PROJECT REPORT VINCOM MEGA MALL ROYAL CITY Rejuvenate the Future of Retail Experience Lecturer: Ms Nguyễn Thị Cẩm Nhung Class: BMM09 - Group 02: Vũ Hồng Nhung - 79335 Trần Huệ Trúc - 80169 Nguyễn Thu Hà - 77789 Lê Thị Thu Thủy - 79999 Ngô Thị Phương Anh - 77084 HAI PHONG - 2021 TABLE OF CONTENTS I Executive Summary II Company Overview 2.1 Brief introduction 2.2 Statement of objective 2.3 Statement of mission 2.4 Core values 2.5 Logo 2.6 Ownership structure III Market Research 3.1 Industry Analysis 3.2 STP analysis 11 3.2.1 Segmentation 11 3.2.2 Targeting 13 3.2.3 Positioning 13 3.3 SWOT Analysis 13 3.3.1 Strengths 14 3.3.2 Weaknesses 15 3.3.3 Opportunities 17 3.3.4 Threats 18 IV Big Actionable Ideas 21 4.1 Redesign customers experience 21 4.2 Innovate tenant mix (rearrange pop-up stores according to customer segments) 22 4.3 Strategically digitalize mall operations 30 4.3.1 Smart parking system 30 4.3.2 Smart automatic payment machine in the supermarket 31 4.3.3 Intelligent service robots 33 V Action plan 35 VI Financial projects and appraisal 36 6.1 Formulation of a financial project 36 6.1.1 Sale projection (Projection of the statement of profit and loss) 36 6.1.2 Cash flow statement 38 6.2 Financial appraisal 39 VII Risk assessment 40 VIII Conclusion 41 IX REFERENCES 42 X APPENDIX 44 I Executive Summary Vincom Mega Mall Royal City (VMMRC) is the first subterranean shopping mall complex in Vietnam to comply with international standards and vast parking lots It is dubbed in Hanoi as a "miniaturesque European City" and earned "Vietnam's finest mega-mall" in 2014 Vincom Mega Mall Royal City's key enticing aspects are a large retail area, many entertainment choices, restaurants, commercial activities, and sales promotions Seventy percent of visits to Vincom Mega Mall Royal City currently have an average salary of less than VND 15 million per month and are under 35 years old All shopping malls and tenants are seeking solutions to enhance footfalls and revenues through trade marketing and promotional campaigns The Vincom Retail leaders have been spending a lot of time developing an approach to establishing VMMRC as the leading position in the Vincom shopping chain We want to rejuvenate this Mega Mall to become the “number one” place that initiates and spreads trends to the targeted customers However, in recent years, due to the lack of updates and improvements in terms of quality as well as not focusing on improving customer experience, the number of visitors visiting and shopping at Vincom Mega Mall Royal City has decreased significantly Instead, more and more shopping and entertainment centers have sprung up, such as Aeon Mall, Discovery Complex, attracting massive attention from visitors from all over the country We decided to assist with some innovative solutions to achieve this ambitious goal Specifically, we would like to focus the solution on addressing the following aspects: Redesigning customer experience Innovating tenant mix Digital transformation of retail experience II Company Overview 2.1 Brief introduction - Business Name: Vincom Mega Mall Royal City - Legal form o Sole Proprietorship/ Private Company: VinGroup o Limited Company: Vingroup Joint Stock Company - Location: No.72A Nguyen Trai Street, Thanh Xuan district, Hanoi - Business sector: Retail shopping - Product/ Services: Provides a wide range of travel, shopping, entertainment offerings where customers can combine sightseeing, consuming, and family interaction in one visit - Personnel: 388 employees 2.2 Statement of objective Vincom Mega Mall Royal City aims at becoming the 'no 1' site where the trend towards consumer targets may be initiated and spread 2.3 Statement of mission Vincom Mega Mall Royal City's mission is to pioneer a unique shopping, entertainment, and dining experience, helping to shape a new consumption style for consumers II.4 Core values Picture 1: Vincom Retail’s Core values (Source: Vincom Retail annual report, 2017) II.5 Logo Vincom Retail's logo portrays a bird flying towards the Sun indicating both its aim and the drive to attain new levels of success Picture 2: Vincom Retail Logo (Source: Vincom Retail annual report, 2017) 2.6 Ownership structure Figure 1: Organizational chart (Source: vingroup.net) Picture 3: Leadership chart (Source: vingroup.net) Picture 4: Executive Board of Business Areas (Source: vingroup.net) III Market Research 3.1 Industry Analysis Vietnam's retail real estate market recovered slightly after the anti-Covid-19 blockade shock in 2020 In which, Da Nang received clear optimistic signals after a period of hiatus Colliers Vietnam, the rapid economic recovery makes Da Nang an attractive retail market The rent of retail space in commercial centers in Da Nang in the first quarter of 2021 increased by 6-7 USD/m2/month compared to the previous quarter The occupancy rate was recorded at nearly 90% In Ho Chi Minh City, the Covid-19 period in February 2021 did not have much impact on the retail market, the rent of commercial centers in the central area still increased by 5-10 USD/m2/month compared to the fourth quarter of 2020, while the commercial centers in the suburbs had a slight decrease in rent (decreased by about USD/m2/month) Many shopping centers still keep occupancy rates up to 100% with long-term tenant contracts Vacancy rates at high-end shopping centers in Districts 1, 2, and have almost recovered or even improved compared to last year In Hanoi, the rent at commercial centers in Hanoi decreased by - USD/m2/month The occupancy rate remains stable, reaching nearly 100% for retail podiums and nearly 90% for shopping centers (Le Q, 2021) Vincom Retail's total consolidated net revenue in the first quarter of 2021 reached VND 2,226 billion, up 32% over the same period in 2020 In which, investment real estate leasing continued to grow with revenue reaching 1,712 billion dongs, up 18% over the same period last year Revenue from the real estate transfer segment reached VND 452 billion - an increase of 125% over the same period, due to the handover of three large commercial townhouse projects Consolidated profit after tax of Vincom Retail reached VND 781 billion in the first quarter of 2021, up 59% over the same period last year Regarding the scale of operation, Vincom Retail owns and operates 80 trade centers (commercial centers) in 43 provinces and cities nationwide as of March 31, the total retail floor area is about 1.7 million square meters Vincom Retails aims to achieve an after-tax profit of about VND 2,500 billion; net revenue from production and business activities reached 9,000 billion dongs The targets of revenue and profit both increased compared to the implementation results in 2020, increasing by 8% and 5% respectively It is expected to continue to provide the market with nearly 100,000 square meters of retail floor space, bringing the total retail floor area across the system to 1.8 million square meters With various types of shopping malls, this business will focus on developing large-scale Vincom Mega Mall in Hanoi and Ho Chi Minh City In addition, this business plans to open two shopping centers under the Vincom Plaza brand, Vincom Plaza My Tho and Bac Lieu in 2021 Regarding cooperation, developing strategic partners and tenant relations is the focus of the business plan in 2021, according to Vincom Retail's Board of Directors Accordingly, the business will continue to expand the network of new tenants in groups, including large international groups, new tenants with the potential to become chain customers, and Vietnamese tenants (Van P, 2021) With basically successfully controlling the COVID-19 pandemic in 2020, the industry in the first quarter of 2021 achieved a decent increase of 6.5% over the same period last year (General statistics office, 2021) Domestic trade has a positive growth rate, up 6.4% over the same period last year thanks to increased consumer demand, preparation for Tet holiday and businesses, trade centers, supermarkets… There are many promotions and discounts to stimulate demand and attract people's consumption (Phan, 2021) Figure 2: Revenue structure of the retail industry (Source: GSO, 2020) Total sales of consumer goods and services reached 5,073 trillion thanks to a strong recovery in demand at the end of 2020 According to the fourth quarter data of the General Statistics Office, the total sales of consumer goods and services increased by 7.8% y/y mainly thanks to a 12.2% YoY increase in retail sales, accounting for 78% of total sales The remaining industry group decreased by -5.8% over the same period, accounting for 21.4%, including accommodation and catering, travel, and others Figure 3: Essential and non-essential spending structure (Source: Fitch Solution, 2020) Vietnam is still spending a lot on consumer staples due to the low average income but is expected to gradually switch to more consumer discretionary as income improves The disposable income of Vietnamese people affected by COVID-19 and high thrift should focus on consumer staples spending The consumption structure still focuses on essential products, accounting for 61% of total household spending F&B with the largest value reached VND 767,940 billion, growing 12% YoY in 2020-2024 In the medium and long term, opportunities for consumer discretionary retailers will increase as lifestyle demands increase Experts estimate that in 2021, Vietnam's retail segment may soon recover, returning to pre-epidemic levels and many growth trends Specifically, according to a forecast of VNDirect Securities Joint Stock Company, it is expected that consumption will recover to pre-pandemic growth, total retail sales of consumer goods and services is expected to increase by 8.5%- 9% compared to 2020 Retail sales in 2021 increased thanks to the recovery of consumer confidence and the spread of vaccines for the pandemic Besides, from the differentiation of the retail industry in 2020, experts also forecast that in 2021 this industry will have main trends: Large retail companies seize opportunities to increase market share; shift consumer spending toward essentials, favoring grocery retailers; Covid-19 boosts the