retail management project start up the best convenience store bcs

Yun Ju Young - CEO of GS25 Vietnam Company, in Korea, convenience stores account for 15% of the total retail market, Vietnam is just over 2%, so Vietnam has a very big potential.. The re

VIETNAM NATIONAL UNIVERSITY HO CHI MINH

CITY INTERNATIONAL UNIVERSITY SCHOOL OF INDUSTRIAL AND ENGINEERING MANAGEMENT

Semester 1 (2022 – 2023)

RETAIL MANAGEMENT PROJECT: START-UP: THE BEST CONVENIENCE STORE (BCS)

Ho Chi Minh City, Vietnam

December 2022

I TYPE OF RETAIL

1. Why is a Convenience Store? (Trong Nhan)

A recent study from Nielsen has shown that convenience is one of the most important factors that consumers put on retailers Therefore, along with traditional channels such as traditional markets, grocery stores; Convenience stores are increasingly growing, especially in urban areas The number of convenience stores has increased by many times This phenomenon comes from the fact that Vietnameses’ consumers are becoming younger – they demand more convenience and complex requirements on services and products to meet the needs of their busy lives According to information provided by Nielsen, on average, there will be one store for every 1,000 people, while in Vietnam, there is only one store for every 69,000 Vietnamese In fact, in Japan, Korea and China, convenience stores are the fastest growing retail channel as the economy grows and income levels rise According

to Mr Yun Ju Young - CEO of GS25 Vietnam Company, in Korea, convenience stores account for 15% of the total retail market, Vietnam is just over 2%, so Vietnam has a very big potential Therefore, the number of convenience stores must be tripled to satisfy the increasing demand of consumers Vietnam's retail revenue in 2017 was 129.5 billion USD, up 10.9% compared to 2016 According to the General Statistics Office's forecast, by 2020, Vietnam's retail trade growth rate will reach 11.9%/year, and the market size is about 179 billion USD The retail market in Vietnam is developing and full of potential, young people, especially students, are very interested in convenience stores Realizing the potential market and increasing demand of young consumers, we decided to start

up a convenience store The success of Lotte Group in Vietnam is also the motivation for BCS to choose a convenience store startup in the Vietnamese market

Nguồn: Vietnamnet.vn

2 About the Best Convenience Store (BCS) (slide-KH)

a. The general information (KH)

BCS is a start-up company about a chain of 24/7 convenience stores, founded in the year

2022 With an aim to develop into one of the leading brands of convenience stores inside the domestic market, our retail brand craves for offering customer trust and satisfaction when having an in-store shopping experience, creating a sustainable belief on account of the prestige and quality in each product and service As a result, the name “The Best Convenience Store” (BCS) is given

As a very young convenience store brand, when entering the retailing market in Vietnam, our convenience store chain will joint venture with Son Kim Group to start up In particular, following the mutual agreement, BCS will hold 40% of the shares while Son Kim holds 60% of these Thus, our

company will provide the joint venture - Son Kim group with trademark rights as well as experience managing and operating convenience store chains In return, the Son Kim joint venture has to pay royalties and retail income corresponding to a 40% stake to BCS The reason BCS chose to joint venture with Son Kim is derived from the giant operation of the group in the fields of real estate, media and particularly in retail This company has been owning a large chain of lingerie stores and many fashion centers for years, thus, it would support our retail store in developing and managing the store’s brand.

At the beginning of its establishment, BCS was formed with a total starting capital is 9.050.000.000 VND, with:

Total fixed assets: 1.030.000.000 VND

The floating capital: 8.753.700.000 VND

The supplementary budget: 2.350.432.000 VND

It is reported that the general finance resources have been added annually by revenue from business activities of retailing physical stores and e-commerce, especially by the floating capital of the company

b The target value (KH)

● Brand strength and reputation: BCS has a great ambition to become one of the most

recognizable convenience store brands, be a reliable and efficient retail trader within Vietnam's commercial market

● Convenience and coverage: In order to make sure that customers can easily access our

stores, BCS aims to place the retail locations all over, particularly close to densely populated areas

● Customer service: Our retail stores strive to offer excellent customer service, oriented

towards friendliness Providing customers with interesting shopping opportunities

● Product range: A wide range of products are available from BCS Drinks, snacks, fresh

food, coffee, as well as common household appliances, cosmetic products, and other things are included Our desire is to accommodate all the basic demands of the customers

c The offered service (GN)

- Mobile Driven Experiences: In the age of digital, consumers are always on the lookout

for digital and tech-driven experiences Therefore, applying mobility to our customers’ convenience store experience may greatly improve our sales and bottom line BCS will offer customers to complete their purchases, scanning and paying through the BCS’s app or website, thus improving convenience while promoting social distancing

- Card payment: Throughout the mobile-driven experiences, our retails will support card

payment with a variety of cards such as credit cards (Visa, Mastercard, Dinner club, Amex, JCB ) and other domestic debit cards to make customers' shopping simpler than ever

- Made-to-order foods: Besides the assortment of grab-and-go food and refreshments,

BCS offers breakfast food combos for our shoppers Crispy Vietnamese Baguettes with Iced coffee, Stir-fry noodles, or fresh sandwiches can easily delight our customers in the morning Beyond breakfast, warmed deli, hot foods, and made-to-order items fill a market hole for customers that want a hot meal but do not have to cook themselves, which is less expensive than a restaurant and much healthier than fast food

d Specialty

- Vietnamese Menu (Menu Thuần Việt):

● BCS intends to build our own supply chain to supply fresh ingredients to make Vietnamese foods served in our store Since we are a Vietnamese start-up project, we wish to provide Vietnamese food to our customers more than other popular fast food easily found in many convenience stores such as Korean rice cake, fried food or mixed noodles Moreover, our company believes the idea of serving Vietnamese food will strengthen the campaign "Vietnamese people give priority to using Vietnamese goods"

food and Vietnamese people give priority to using Vietnamese goods, therefore, we believe our

Vietnamese menu (Menu Thuần Việt) will attract many customers and be strongly supported Vietnamese spring rolls (Goi cuon) and Bo La Lot will be first introduced in our menu These two

dishes are known as native street food, however, they are nutritious enough and really flavorful to satisfy our customers

● With the idea of supporting Vietnamese cuisine, our BCS also intends to have a collaboration with Trung Nguyên E-coffee to serve local coffee beverages

TARGET MARKET (slide-ngắn)

1. Target Market Analysis

a Demographic (KH) (KHtt)

In terms of income and age, our convenience stores serve all ranges of age, and anyone is welcome to visit the store and purchase goods Domestic workers, students, and housewives are among the most frequent customers among adults and kids People with low incomes can also

purchase goods here because of the wide variety of goods available and the reasonable prices; these products range from common household items to imported goods and food A survey conducted by our group shows that the main class of customers that pay attention to convenience stores is from 19 to

24, followed by the age from 15 to 18

Other research also indicates that junk food, street food, and milk tea are top priorities for young people aged 15 to 19 On weekday mornings, the most popular foods are junk food (32%), street food (30%), and specialty coffee (25%) Door-to-door food delivery services are utilized notably heavily at midday (36%), probably to save brief lunch breaks Thus, our store creates some categories

of products to fascinate that group of age like fast food and street food Besides, young individuals aged 20 to 24 who are students or new to work frequently utilize food delivery services and consume milk tea both during the week and on weekends The diversity of street stores also caters to their nightlife It is possible to say that the 20-24 age group is a prospective group of nighttime street stores Hence, BCS decide to open 24/7 and makes space with a lot of seats to opportunity those people can stay here and work for a long time along with the high quality of our service Furthermore, we also collaborate with Trung Nguyen E-coffee, which is a chain of coffee world retail stores of Trung Nguyen Legend Group – the quintessential convergence of 3 coffee civilizations: Ottoman – Roman – Zen launched in the period of 8/2019 We believe that our collaboration will bring a new experience to those people that be in favor of traditional coffee and want to try tasty foods as well as great services

in our convenience store

Besides, the demographic analysis also focuses on the income level of customers Our recently conducted survey implies that the main group of buyers in convenience stores has low to moderate levels of monthly income Thus, our strategy is to serve products at a wide range of prices but center on the category of low-price merchants

b Geographic (Uyen Nhu) (KH tt)

Geographic segmentation is a marketing tactic used to target goods or services at customers that reside

in or frequent a specific area It operates under the tenet that locals have common needs, desires, and cultural considerations Therefore, in order to meet this strategy, first of all, we have to focus on areas near schools, which are often crowded by students Students, who are our target customers, will prefer the products in convenience stores such as snacks, fast foods, soda, etc After determining the sites, in order to create attraction and stimulate curiosity for young people, students, and pupils, seasonal promotions are necessary to be operated to increase the sale revenue Last but not least, the number of items adjusting is inevitable to meet the needs of each area We must modify the number of commodities in accordance with the distinctive needs of each region To be more precise, we must increase the proportion of popular goods and decrease the proportion of slow-moving ones

c Psychographic (Neuer) (Neuer tt)

Besides demographics and geographics, psychographics is one of the most important qualitative methodologies of retailers in analyzing customers' psychological characteristics and traits BCS will primarily focus on understanding the consumer’s emotions and values, based on these six main factors: personality; lifestyle; interests; opinions, attitudes and beliefs; values; and social status

Product

Serving famous and traditional Vietnamese dishes, focusing on Vietnamese customers and bringing them to consumers in a more appealing, sanitary, and high-quality manner Prices should be moderate and appropriate for people of all ages and social classes Besides, combining other utility services such

as paying electricity, water, and phone bills, as well as withdrawing money…

Sorting garbage, limiting the use of plastic waste, using recyclable or easily destroyed items, and heeding the environmental protection message

Service

Seating service must be served and a charging socket has been installed The space must be clean, wide, and decorated with vibrant colors and dynamic images, short maxims, or encouragement in life Clean and odorless toilets are also important factors influencing customer choice and loyalty Free wifi and a stable network Customers fill in the information to access wifi, through which BCS can collect information or take surveys from customers, in addition to running promotions on the login app Last

but not least, there is a parking space and a security guard to keep an eye on the car while customers shop at the store.

2 Purchasing habits

BCS will contact a customer based on their purchase or browsing history on the website, or on the system's incoming and outgoing goods data For example, customers frequently go to convenience stores in the morning to buy coffee and breakfast food; BCS should set up more coffee and run discount combos for these products

3 Customer engagement

The majority of customers fall into one of three engagement categories:

● Occasional: These customers are familiar with our brand, but they rarely buy The majority of them are passersby who require an item quickly

● Regular: Customers who buy and shop at the store on a regular basis, such as students, officers, and residents

● Intensive: These are typically the most loyal customers

Knowing customer engagement is important for having the right approach, as well as doing statistics

or finding the best location to open new store branches in the future

6 Customer loyalty

Learning which customers are your most loyal—and retaining them as long-term customers—can be accomplished by collecting customer phone numbers or accumulating points through the app to redeem gifts, receive birthday vouchers, or participate in a variety of other promotions Furthermore,

we can leverage their ongoing support to highlight the value of our products and services while also appealing to new potential customers

2. Trade – Area (Tien Nham + Xuan Dong) (slide-thật ngắn để dẫn dắt vào phần

sau) ((Neuer tt)

1 Accessibility:

The store is close to neighborhoods, schools, and other amenities This can provide clients from a wide variety of segmentation with a high level of accessibility, particularly students Additionally, we should think of certain natural and man-made barriers (traffic flow) to make it easier for clients to enter and exit the property Additionally, we can utilize some benefits to generate better accessibility, such as being close to a bus stop, opposite or next to schools, We also have to have a parking area, which will be convenient for customers when they come to our store

2 Natural and Physical barriers:

To make it simpler for people to learn about the store's existence whenever there is a need and to access it from various directions, choose locations where there are few natural and physical barriers

● Streets: Students must cross the streets in order to reach the store which is located at the opposite corner of the road

● Houses and Buildings: If surrounding buildings are higher than stores

● Under construction zone

● Too far: Students who are not provided with personal vehicles will feel difficult to reach the store

3 Type of store:

Convenient store with Vietnamese specialty

4 The nature of merchandise, assortment, and location of alternative sources for the merchandise:

BCS provides a large assortment of Vietnamese products, foods which have Vietnamese unique cuisine and flavor like spring rolls, and we also have fast foods like noodles and other stuff for students to choose BCS also provides resting place for customers, especially students who don’t have seats outside, or just a place where they can have a short break before going back to work or study in the afternoon

5 Competition:

BCS must face competitors including

● Other convenience stores, a store that has Vietnamese specialties has to face Korean or Japanese convenience stores, which already have a huge amount of customers who choose them

● Coffee shops provide a low-cost resting place, where you can stay with only 1 cup of coffee

That is the reason for the application of two methods to identify the best sufficient location which are the TOPSIS method and Huff’s Gravity Model

Occupancy cost:

We obtain this table after searching for house leasing price/ square meter/ month:

VND)

Hong Bang

https://batdongsan.com.vn/tags/cho- 5

thue/cho-thue-nha-duong-hong-bang-quan-0.48

Nguyen Gia Tri

(D2)

thue/cho-thue-nha-mat-pho-phuong-25- binh-thanh

thue/sang-mat-bang-duong-vo-van-ngan-0.69

An Duong Vuong

https://batdongsan.com.vn/tags/cho- duong-vuong-quan-5

thue/cho-thue-nha-mat-pho-duong-an-0.75

TOPSIS Method: (

Huff’s Gravity Model

Where:

= Probability of a customer at a given point of origin traveling to a particular shopping center j

= Size of shopping center j

= Travel time or distance from customer's starting point to shopping center

b = An exponent to that reflects the effect of travel time on different kinds of shopping trips

After a long period of time taking into consideration the site location, we have decided to build up our

Choosing the customer‘s starting point is the school zone and the traveling distance will be the total gap between our store as well as those nearest convenience stores and the school zone

Location Size (square meter) Traveling distance (km)

Determining the potential sale of the new retail store after a period of operation is one of the key elements affecting the decision of siting the location in which area In order to estimate the expected revenue of the store, we first verify the market size of each area denoted above According to Steven, author of the article “What is the definition of market share” defined market size is the number of sales

or customers who are potential to the business it can be found out by looking at existing sales

numbers, or in simplified meaning, is the total potential number of customers or sales, usually in a given year.

Following the market research that we have already made, the average amount of money that customers are willing to pay is 100,000 VND per time for shopping in a convenience store

Figure : The average amount of money per time for shopping of customers

In the area surrounding Nguyen Gia Tri Street, the number of customers is extremely large, derived from the visitors who come to a variety of convenience stores, the hospitals; and undergraduates from the nearby school zone as well as the inner residents It is estimated that the total number of potential customers on this street is 4,600,000 customers visiting Nguyen Gia Tri Street per year Hence, the market share that those customers bring to this street in Binh Thanh district is a total of 460 billion VND

Let's choose the location of the nearest convenience stores on D2 street, which are Circle K and Family Mart

The probability of customers in the first nearby convenience store, Circle K (27 Nguyen Gia Tri), visiting the start-up store on Nguyen Gia Tri Street:

P = = 0.073For the store Circle K (113 Nguyen Gia Tri):

P = = 0.309Continuing for the remaining stores, the probability will be 0.411 and 0.107, respectively for store Family Mart and Ministop

Thus, the expected selling revenue is:

460 (0.073 + 0.309 + 0.411 + 0.107) = 414 (billion VND)

Location Convenience Restriction

nearby, easy to get to, near housing estates and companies

- Sometimes there are traffic jams at peak hour, on small streets

- There are other conveniencestores which are considered

as our rival, located on this street

Nguyen Gia Tri

Street

- This route is surrounded by many universities, and also the famous culinary streets of Binh Thanh District

- Easy to identify and access; the road width is quite wide with

no median strip, and there are sidewalks on both sides of the road

- Highly competitive with many Food and Beverage brands; other convenience stores and street vendors

- This route occasionally has traffic jams during peak hours

of District 10, where many universities, high schools, hospitals, 24/24 cafes, shopping centers are located

- Traffic jams at rush hour

- Highly competitive with many famous F&B stores, 24/7 cafes and street vendors

An Duong Vuong

Street

- Two largest universities in the country and having a large number of students are located, which are Ho Chi Minh City University of Science and Ho Chi Minh City University of Education

- There are a few convenience

- - Prestigious convenience store brands have already operated along the street, which are considered as our rivals

- - Large numbers of students can gather at once before or after school

stores, but the capacity is not adequate to meet the demands and the large number of students.

hospitals, highschools, universities, a culture house and a park; reasonable occupancy cost

- Sometimes there are traffic jams at peak hour, near some other convenience stores

Analyzing a new location

The most important factor for any retail store, especially a new brand, is location As a result, to decide where to locate the store, we carefully considered many aspects based on factors such as the size of the trade area, the occupancy cost of the location, the density of people movement and customer demand there, the pedestrian and vehicle customer traffic, property restrictions, the level of convenience with respect to customers, and competitors The following are some of the most obvious benefits and drawbacks of locating BCS's first store on Nguyen Gia Tri Street

Advantages

Nguyen Gia Tri, also known as D2 is considered one of the super famous culinary streets in Saigon that is popular with foodies This route is an outstanding site of Binh Thanh district because of the high-quality service that offers the most unique shopping, dining and entertaining experiences Besides, the density of movement and traffic is frequent because it is surrounded by Foreign Trade University, Hutech University, Industry University, University of Transport, Gia Dinh high school…Another plus point of this location is that it is easy to identify and access; the road width is quite wide with no median strip, and there are sidewalks on both sides of the road In general, the cost of renting space is less than that of the other locations on our consideration list, and this also includes the parking area in front of the store

Furthermore, this street has many Food and Beverage business models from famous brand stores and also sidewalk eateries, which makes it always bustling, crowded, and appealing The 24/24 cafes are

especially noticeable on this route If a new 24/7 convenience store opens near these locations, it will most likely attract the majority of students and young people BCS, in particular, provides a competitive advantage by focusing on traditional and familiar dishes in Vietnam, while customers are more and more concerned about environmental issues and food hygiene As a result, we believe that our store will reach and meet a large number of customers at this initial location.

Disadvantages

● Compete against food and beverage brands

As mentioned above, this is a busy eating street, so convenience stores must compete with many food startups and well-known brand F&Bs, as well as nearby street vendors

● Compete with other convenience stores

There are currently five convenience stores on this road: two Circle K, two ministops, and one Family Mart, all of which are well-known brands in Vietnam, and thus remain BCS's main competitors However, based on actual observations and market estimates, BCS can be successful to put a new store here due to high customer requirements despite the wide street and busy traffic density

● Traffic flow and congestion

This route occasionally has traffic jams during peak hours, especially when schools dismiss at the same time or people spill from the District 2, Go Vap district

III. RETAILING CHANNEL (slide-ngắn) (GN tt)

BCS is a start-up convenience store that has extreme competition with others such as Circle

K, Gs 25, or Ministop within the current retailing market in Vietnam The main products belong to the FMCG group which is Fast Moving Consumer Goods Thus, to determine which channel is more profitable based on the company’s strategy like a physical retail store or an e-commerce website, our company has a tendency to reach out to our customers via intermediate customer touchpoints in order

to offer the store’s products or services Following a Consumer Behavior Trends Report by NielsenIQ, during the period of 2022, especially after the Covid-19 epidemic with the recovery of the nationwide economy, Omni shopper became an emerging trend at the start of the pandemic and is still maintaining its growth momentum Multi-channel shoppers are aged 18-30, accounting for about 90% of all internet users in Vietnam (according to 2016 statistics), which is also the main target market of convenience stores as well as our BCS

With a view to attracting and accessing a large number of customers and delivering the products and services, BCS has applied some retailing channels to target different audiences and be suitable for the specific features of the merchandise As a result, customers can quickly look for and purchase those products anywhere or anytime that they need and feel convenient for themselves

The first retailing channel our company focuses on is a physical retail store to provide merchants and services with fast demand for passengers or pedestrians The essential advantage of having a brick-and-mortar retail store is to introduce the products to customers in the context of allowing them to experience the products and related services and then build on that experience and relationship in person so that it stays with them It is crucial for our convenience store, in which foods are prominent among remaining products Thus, having a retail store is an opportunity for BCS to allow our customers experience the tangibility of the products and the services as well as leverage the human touch factor by having store associates engage with the customers directly for assistance and promoting sales

In addition, with regard to the group of busy customers, who have little time to go shopping, BCS also distributes products via the website, online app, and e-commerce marketplaces like Shopee food and Grab food With the appearance of a series of websites and e-commerce platform applications such as Shopee, Lazada, Zalora, or JD , customers can easily shop for everything A survey conducted in 2022 by NielsenIQ shows that 73% of consumers said they regularly make purchases on e-commerce shopping platforms and 59% said they have repeatedly ordered or shopped

on international websites

Furthermore, in the context of supply chain disruptions and inflation, users have quickly adjusted their shopping behavior, actively switching between purchase channels to ensure a consistent shopping experience These channels will provide online buyers with a diverse assortment, and prices; support them with the delivery system within the city to save time in purchasing

IV MERCHANDISE MIX (slide)

1 Organization of product (Xuân Đông) (XĐ tt)

Merchandise mix diagram of BCS