The effect of covid 19 pandemic on r nthe retail industry a view from r nbusiness analysis of mobile world r ninvestment corporation

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The necessity of the thesis

The retail industry in Vietnam is one of the fastest-growing sectors, boasting a remarkable compound annual growth rate (CAGR) of 17.5% from 2017 to 2021, according to Vietnam Report Fueled by the highest growth of the middle class in Southeast Asia, rising disposable incomes, and a youthful demographic, Vietnam's retail market has attracted significant foreign investment The synergy between traditional trade and modern retail formats, particularly the rise of e-commerce, has empowered the retail industry, enhancing its growth potential and delivering substantial benefits to the national economy.

Figure 1 Top 7 industries with the highest CAGR in the 2017 - 2021 period

In December 2019, a new virus emerged, raising alarms among medical experts due to its high contagiousness and potential lethality This virus subsequently led to the global COVID-19 pandemic, which significantly affected economies worldwide, including Vietnam The emergence of COVID-19 has had far-reaching consequences across numerous countries.

2 pandemic in 2020 has created numerous challenges in the domestic market's production and commercial condition, as well as hampered import and export activity to other nations

The global pandemic in 2020 severely impacted various industries, with Vietnam's retail sector experiencing significant losses Signs of a downturn in the Vietnamese retail market became evident as early as February.

The COVID-19 pandemic, which began in 2020, led to significant outbreaks in early April and late July, severely impacting retailers across the board.

The year 2021 witnessed potential growth and a sign of a positive recovery of the retail industry Despite being one of the most seriously affected industries by COVID-

The retail industry has shown a remarkable recovery, outpacing many other sectors, with resilience building month by month However, the fourth COVID-19 outbreak in May 2021 led to a significant decline in the industry's growth compared to the previous year Fortunately, a strong rebound occurred starting in October, following the lifting of social distancing measures.

The COVID-19 pandemic has significantly impacted the retail industry, creating a stark contrast in business conditions among various categories A survey by Vietnam Report revealed that over 71% of retailers in durable goods, such as jewelry and electronics, faced severe challenges, while only about 17% of consumer goods retailers reported similar levels of impact Despite a decline in direct shopping revenue, the retail sector has seen positive developments in e-commerce, online shopping, and delivery services.

Since the onset of the pandemic, numerous retail companies have adapted to evolving business conditions with increased flexibility By capitalizing on the rapid growth of the industry and staying attuned to market trends, Mobile World Investment Corporation (MWG) has established itself as a leading player in the retail sector.

Despite the challenges posed by COVID-19, MWG has emerged as the leading retailer in Vietnam, boasting over 4,500 stores and significant revenue growth The company has successfully diversified its retail chains, with Thegioididong and Dien May Xanh specializing in mobile phones and consumer electronics A standout performer during the pandemic, Bach Hoa Xanh has solidified its position as one of the largest grocery retailers In 2021, MWG reported a remarkable 13% increase in sales, totaling nearly VND 124,142 billion, while profit after tax surged by 25% to exceed VND 4,900 billion compared to the previous year.

This study, titled “The Effect of COVID-19 Pandemic on the Retail Industry: A View from Business Analysis of Mobile World Investment Corporation,” aims to assess and compare MGW’s financial performance before and after the COVID-19 pandemic Additionally, it offers insights into the broader impact of the pandemic on the retail industry as a whole.

Objectives of the thesis

This thesis examines the impact of recent economic factors on Vietnam's retail industry during the Covid-19 pandemic, emphasizing macroeconomic influences It transitions from an industry-wide analysis to a detailed case study at the firm level, providing deeper insights into the sector's response to the crisis.

This thesis analyzes financial indicators to assess the impact of the COVID-19 pandemic on MGW's performance, focusing on the extent and manner of the retail group's recovery following the pandemic.

Methodology of the thesis

This study employs a secondary research method to assess the impact of COVID-19 on the retail industry and analyze MWG's financial performance during the pandemic By synthesizing existing publications, the research gathers valuable insights into the current retail landscape, technological advancements, and market trends The analysis focuses on MWG’s financial reports from 2019 to 2021, utilizing these documents to calculate key financial ratios and evaluate the company's performance amidst the COVID-19 outbreaks.

Subject, scope, and the limitations of the thesis

Subject: Vietnam’s current retail industry and the financial performance of MWG

Scope: The retail industry as a whole and the financial performance of MWG before and after the COVID-19 pandemic

The study's limitation lies in its narrow focus, as it does not examine the impact of the COVID-19 pandemic on the financial performance of other retailers in the industry Additionally, the analysis is restricted to the period from 2019 to 2021, which reflects the most significant effects of the pandemic.

Thesis structures

The remainder of this study is presented as follows:

Chapter 1: Literature review and theoretical basis

Chapter 3: Analysis of the retail industry

Chapter 4: Analysis of the financial performance of Mobile World Investment

LITERATURE REVIEW AND THEORETICAL BASIS

Literature review

The COVID-19 pandemic has significantly impacted businesses worldwide, with certain industries experiencing greater vulnerability than others Research indicates that sectors such as catering, tourism, transport, and retail have faced severe declines in financial performance, particularly among Chinese listed companies Additionally, the American retail sector has been identified as highly susceptible to disruptions caused by the pandemic Overall, studies have focused on measuring and ranking the degree of vulnerability across various industries in response to the COVID-19 crisis.

The Vietnamese economy faced significant challenges due to the COVID-19 pandemic, with the tourism and hospitality sectors being particularly hard-hit by government lockdowns and travel restrictions (Hoang, Duc & Anh, 2020) The retail industry also experienced severe impacts, as noted by Quynh & Quy (2021), with many businesses facing store closures, bankruptcies, and workforce reductions (Palexy, 2020) Over 70% of retailers reported permanent store closures, while 80% reduced their workforce to cut operating costs during the crisis Additionally, nearly 55% of retail businesses experienced revenue drops exceeding 40% compared to their targets (Palexy, 2020) Data from the Ministry of Planning and Investment revealed that in the first 11 months of 2021, around 33,309 businesses in the wholesale, retail, and repair sectors exited the market, representing 31.3% of the industry and marking an unprecedented record for the retail sector.

On the other hand, Quynh and Quy (2021) also indicated that the retail industry is among the quickest industries to have a rapid capability of recovery It is reported that

Despite the ongoing challenges posed by the COVID-19 crisis, Vietnam has effectively managed the pandemic, leading to a significant recovery in retail sales of consumer goods and services in the first 11 months of 2021 (General Statistics Office, 2021) Most businesses exiting the retail market are small-scale, heavily impacted by social distancing measures, while large-scale retailers are expected to rebound and grow robustly by 2022 (Giap, 2022) Additionally, Mobile World Investment Corporation (MWG) has been identified as one of the top three reliable companies for long-term investment among 12 retailers on the Vietnam Stock Exchange (Hung et al., 2020) Despite the turbulence from the pandemic, MWG continues to attract attention as a key player in the retail sector due to its consistent year-on-year profitable growth (Linh).

It can be seen that there have been quite a few surveys on the impact of COVID-

This thesis investigates the performance of large-scale retailers in Vietnam, specifically analyzing the economic impact of the COVID-19 pandemic on businesses like MWG While previous studies have focused on the overall effects of the pandemic on the retail industry, there has been limited analysis on how major retailers managed to survive By examining MWG's business performance before and after the pandemic, this research aims to provide insights into the industry's dynamics and the macro-environmental factors that influenced retail operations during this challenging period.

Theoretical basis

Kotler (2012) defined: “Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non-business use.” Under Clauses

6 and 7, Article 3 of Decree No 09/2018/ND-CP dated January 15 th , 2018 stipulates:

"Retailing means the activity of selling goods to individuals, family households and other organizations for use for consumption purposes.” In another word, the term

“retailer” is applied to any business or individual that sells products to customers for personal, family, or household consumption

Retail, therefore, is opposed to wholesaling, which is the sale of goods and services to businesses and institutions Retailing involves gathering, sorting, and

Purchasing goods in bulk from various suppliers, including manufacturers and wholesalers, allows retailers to resell these items to consumers in smaller quantities for profit This process positions retailers as essential links in the supply chain, effectively connecting producers with consumers.

1.2.2 Scope of the retail market

The retail industry is effectively meeting the diverse needs of consumers, catering to a wide range of demands from essential items like food and services to luxury goods such as jewelry As a result, various prominent retail categories have emerged to address these varying consumer preferences.

Food and groceries can be divided into two main categories: fresh food and fast-moving consumer goods (FMCGs) Fresh food refers to unprocessed items like vegetables, fruits, poultry, fish, and dairy products In contrast, FMCGs, also known as consumer packaged goods (CPGs), are products that are sold quickly and at a low cost, including non-durable household items such as packaged foods, beverages, toiletries, and over-the-counter medications.

Clothing is a fundamental human necessity, akin to food, with the textile industry producing a variety of fabrics, including natural and synthetic fibers The most common ready-to-wear apparel includes shirts, T-shirts, trousers, jeans, children's clothing, infant garments, and hosiery like socks and gloves Recently, major clothing retail chains such as Uniqlo and H&M have made their debut in Vietnam, expanding the options available to consumers.

Consumer durables, unlike fast-moving consumer goods (FMCG), refer to long-lasting goods and appliances designed for home use These items, which include digital devices, household appliances, and vehicles, are not frequently purchased due to their durability and extended lifespan.

Jewelry, encompassing precious metal pieces and gemstones, represents a vital retail sector characterized by custom designs and intricate shapes Typically crafted from valuable metals like gold, these adornments are often embellished with exquisite stones Notable industry leaders include Phu Nhuan Jewelry (PNJ), SJC, and DOJI chains, which play a significant role in this market.

Retailing encompasses a wide variety of formats that can be categorized based on several criteria One common classification is by size, which includes large, medium, and small retail establishments Additionally, retailers can be classified by the participants in the market, such as retail businesses, cooperatives, and individual households However, the most straightforward and widely recognized classification is based on the methods of selling and trading goods, which includes traditional store or brick-and-mortar retailing.

Brick-and-mortar retailers engage in fulfillment activities and customer service within physical stores This category encompasses a variety of formats, including local grocery stores and kiosks in wet markets, as well as large-scale national chains such as department stores, hypermarkets, supermarkets, and convenience stores.

Store retailing is characterized by fixed locations designed to attract numerous customers for browsing and purchasing These establishments typically showcase a diverse range of products, with large shopping malls leveraging mass media for advertising Their primary focus is on meeting the needs of individuals and families In contrast, specialty stores concentrate on a narrow product line, offering items such as books, stationery, computers, software, furniture, or construction materials Non-store retailing also plays a significant role in the market.

Non-store retailing encompasses sales conducted outside traditional physical locations, including market stalls and permanent retail sites This broad category includes distance selling, such as mail orders, catalog sales, phone solicitations, and automated vending, as well as e-commerce, which features online shopping, internet trading platforms, travel portals, global distribution networks, and teleshopping.

RESEARCH METHODOLOGY

Business strategy analysis

Business strategy analysis is crucial for understanding a firm's competitive landscape and industry dynamics It serves as a foundational step for financial statement analysis, allowing analysts to explore the qualitative aspects of a firm's economics (Palepu & Healy, 2013) This analysis helps identify key profit drivers and business risks, enabling a thorough assessment of the sustainability of the firm's performance and facilitating accurate forecasts of future changes (Palepu & Healy, 2013).

Businesses operate within an environment that significantly impacts their survival and growth Analysts must consider potential environmental influences to create realistic and achievable plans According to Eren (2002), the macro environment encompasses political, economic, socio-cultural, technological, ecological, and legal factors that affect company operations The CIPD (2021) defines PESTEL analysis as a comprehensive assessment of external factors that can influence an organization's decisions, enabling it to capitalize on opportunities and mitigate threats Thus, PESTEL analysis is essential for strategic planning.

PESTEL analysis is a valuable framework for assessing the macro-environmental factors influencing an industry It categorizes these factors into six key areas, enabling firms to effectively monitor and analyze the external environment that impacts their operations.

2, including Political, Economic, Social, Technological, Environmental (or Ecological), and Legal factors (ICAEW, 2021)

In analyzing the competitive landscape of a business's task environment, Michael Porter's five forces analysis serves as an essential framework According to Porter (2011), competition is shaped by five key forces: the threat of new entrants, the threat of substitute products or services, the bargaining power of suppliers, the bargaining power of buyers, and the intensity of competitive rivalry This model helps businesses understand the dynamics of their industry and make informed strategic decisions.

Figure 2 Possible items in a PESTEL analysis (Source: ICEAW, 2021)

The profitability of an industry is influenced by five key competitive forces: the bargaining power of buyers, the threat of new entrants, the threat of substitute products, the bargaining power of suppliers, and the rivalry among existing competitors According to Porter (2011), these forces shape the prices companies can set, the costs they incur, and the necessary investments to remain competitive, ultimately determining the industry's overall profit potential (ICAEW, 2021).

Figure 3 The Five Competitive Forces that Determine Industry Competition

The threat of new entrants in the industry diminishes overall profit potential by introducing additional capacity and increasing competition for market share, which in turn reduces profit margins Additionally, powerful buyers and suppliers negotiate for better terms, further impacting profitability Intense competitive rivalry leads to higher operational costs or necessitates lower prices for customers, ultimately eroding profits Furthermore, the availability of close substitute products constrains pricing strategies, as competitors must avoid setting prices too high to prevent customers from switching, thereby affecting industry volume.

Accounting analysis

According to Palepu & Healy (2013), accounting analysis aims to determine how accurately a company's accounting reflects its actual business situation By pinpointing areas of accounting flexibility and assessing the suitability of a firm's accounting policies and estimates, analysts can evaluate the extent of any distortions in the reported financial figures.

Palepu and Healy (2013) emphasize the importance of standardized financial statements for analysts, who must be vigilant in identifying distortions within these reports Even when accounting standards are properly applied, they may not accurately depict a company's economic reality, necessitating adjustments To achieve comparability in data analysis, especially when comparing companies that adhere to different accounting standards such as U.S GAAP and IFRS, analysts must make these adjustments (Palepu & Healy, 2013).

After identifying distortions, analysts can leverage footnote and cash flow statement data to adjust the balance sheet for the current year, as well as modify revenues and expenses in the latest income statement This process guarantees that the most recent financial ratios, which are essential for assessing a company's performance and predicting future outcomes, accurately represent its economic reality.

When conducting accounting analysis, it is crucial for analysts to prioritize the evaluation and adjustment of accounting policies and estimates that highlight the firm's primary strategic value drivers While management bias may also influence other accounting estimates, the focus should primarily be on understanding how the firm manages its key success factors and associated risks Therefore, a significant portion of the accounting analysis should be dedicated to scrutinizing the policies that reflect these critical elements (Palepu & Healy, 2013).

Financial analysis

“The goal of financial analysis is to use financial data to evaluate the current and past performance of a firm and to assess its sustainability”, stated Palepu & Healy

In their 2013 study, Palepu and Healy identified two essential financial analysis tools: ratio analysis and cash flow analysis These tools are crucial for evaluating a company's performance and financial health Ratio analysis focuses on the company's income statement and balance sheet, while cash flow analysis examines the cash flow statement to provide insights into the firm's liquidity and cash management.

The starting point for ratio analysis is the company's ROE The next step is to evaluate the three drivers of ROE, which are net profit margin, asset turnover, and

Financial leverage, net profit margin, and asset turnover are crucial indicators of a firm's operational and financial management By analyzing various ratios related to key working capital accounts—such as accounts receivable, inventory, and accounts payable—as well as fixed asset turnover, we can gain deeper insights into a company's asset utilization Additionally, short-term liquidity ratios, debt policy ratios, and coverage ratios are essential for evaluating a firm's financial leverage Cash flow analysis complements these ratio assessments, providing a comprehensive view of a firm's operating activities, investment management, and financial risks Together, the examination of financial ratios and cash flows offers valuable insights for forecasting a firm's future performance.

ANALYSIS OF THE RETAIL INDUSTRY

The performance of the retail industry under the impact of the COVID-19 pandemic: PESTEL analysis

Understanding the retail industry in Vietnam requires a thorough analysis of the business environment, particularly through the PESTEL model This examination focuses on the macro-environmental factors affecting the retail sector, especially in light of the impacts brought on by the COVID-19 pandemic.

Political instability significantly hampers the economic and social development of countries worldwide In Southeast Asia, with the exception of Singapore, many nations have faced coups or political crises since 1990 In contrast, Vietnam has maintained a stable political environment, which has fostered sustainable peace and prosperity A 2019 McKinsey report identified Vietnam as the region's leader in political stability, highlighting it as a key advantage in the country's development process This stability provides a strong foundation for Vietnam's sustainable economic growth.

During the COVID-19 pandemic, Vietnam emerged as a leading nation in effectively controlling the virus, thanks to decisive government management and the collective efforts of its political system and citizens This successful response has positioned Vietnam's economy, particularly the retail sector, for significant recovery and growth in the post-pandemic landscape.

In response to the complex developments of the COVID-19 pandemic, mandatory quarantine measures and urgent actions have been enacted in accordance with the Prime Minister’s Directive No 16/CT-TTg, aimed at preventing the spread of the virus.

The Directive on COVID-19 control, issued on March 31, 2020, significantly contributed to reducing infection rates and managing community transmission in 2020 However, during the fourth outbreak from July to September 2021, particularly affecting Ho Chi Minh City and southern provinces, its implementation severely impacted the retail sector According to the General Statistics Office (2021), retail sales of consumer goods and services dropped by 7.1% in the first nine months of 2021 compared to the same period the previous year.

As of early November 2021, the Ministry of Health reported that over 83% of the population had received their first dose of the COVID-19 vaccine, with approximately 40% fully vaccinated This successful vaccination campaign enabled the government to transition from a stringent "No-COVID-19" policy, characterized by strict lockdowns and significant economic challenges, to a more flexible "Living with COVID-19" approach, which facilitated the reopening of the economy while still upholding necessary health measures.

The Government's Resolution No 128/NQ-CP, issued on October 11, 2021, focused on "Safety, flexibility, and effective control of the COVID-19 epidemic," which has positively impacted the recovery of the retail sector and the overall economy In the fourth quarter of 2021, total retail sales of consumer goods and services surged to 1,312.6 trillion VND, marking a significant 28.1% increase compared to the previous quarter.

In response to the gradual control of the epidemic, the Government has implemented targeted measures to support businesses and individuals, thereby boosting consumption and revitalizing the economy Key initiatives include a 180 trillion VND package under Decree No 41, which extends tax and land rent payment deadlines for businesses, and a 62,000 billion VND support package under Resolution No 42 aimed at assisting those affected by the COVID-19 pandemic Additionally, policies to reduce electricity, water, and petrol prices, along with lower interest rates and more flexible lending conditions, have been introduced These efforts are crucial for the recovery of the retail sector and the overall economy.

The retail industry, a highly popular service sector closely linked to production and goods circulation, is significantly impacted by international economic integration Vietnam's recent adoption of various international integration policies, particularly its involvement in Free Trade Agreements (FTAs), is expected to enhance the retail sector's participation in the global value chain and bolster economic development.

Figure 5: Vietnam’s global economic integration process

Vietnam's involvement in new-generation free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), presents significant opportunities and challenges for its retail industry These agreements are expected to reduce trade barriers, enhancing Vietnam's retail market as a compelling destination for foreign direct investment (FDI).

The retail industry is poised to face heightened competition from foreign investors, particularly from members of the CPTPP and EVFTA, due to the expanding trade market However, commitments in various sectors under the CPTPP may also play a significant role in shaping this competitive landscape.

Figure 4 Vietnam global economic integration process timeline

(Source: Vietnam Chamber of Commerce and Industry (VCCI), WTO)

The EVFTA presents significant opportunities for Vietnam's retail market by expanding access to goods and enhancing e-commerce, creating attractive and effective supply sources This agreement allows businesses to leverage advanced technologies and improve competitiveness, fostering a more dynamic retail environment in Vietnam.

The national social quarantine and extended pandemic have significantly disrupted supply chains, restricting the transportation and circulation of products between manufacturers and retailers Conversely, engagement in global trade agreements enables the retail industry to integrate more deeply into the global value chain, fostering increased competition and new supply sources.

3.1.2 Economic factors a Gross Domestic Product (GDP)

According to the World Bank (2022), Vietnam's economy has demonstrated remarkable resilience during various crises, including the recent COVID-19 pandemic As a result, Vietnam was among the few nations that experienced GDP growth in 2020, even as the global crisis unfolded.

Figure 5 Vietnam’s GDP annual growth rate in the 2011 – 2022 period

Vietnam's GDP growth rate decreased to 2.58% in 2021, primarily due to the impact of the Delta variant that emerged in April However, it is projected to rise to approximately 5.5% in 2022, with expectations of stabilizing around 6.5% in the following years.

Porter’s Five Forces analysis

Vietnam, with a population nearing 100 million and a youthful demographic, presents a promising market for retail investors, both domestic and foreign Despite challenges posed by the COVID-19 pandemic, the country's stable macroeconomic fundamentals enhance its attractiveness Consequently, the retail industry faces significant threats from new entrants, driven by the market's rapid growth.

The implementation of new-generation Free Trade Agreements (FTAs) has reduced legal and tax barriers for foreign enterprises, facilitating their entry into Vietnam's retail industry With advantages such as substantial capital, management expertise, and strong brand recognition, foreign investors are well-positioned to capitalize on the rapidly growing retail market, allowing them to easily gain market share.

Retail plays a crucial role in the distribution of goods, acting as a vital connection between production and consumption This sector not only boosts trade and services but also facilitates the convenient delivery of products to consumers In light of its significance, domestic manufacturers and investors are increasingly engaging in the retail industry, particularly through mergers and acquisitions (M&A) to enhance their market presence.

In response to the challenges posed by foreign companies entering the retail sector, many Vietnamese businesses have united to strengthen their presence in the market A notable collaboration is the partnership between Masan Group and Vingroup, which aims to establish one of Vietnam's largest retail and production chains These alliances not only lower operational and sales costs but also provide consumers with competitive pricing, enhancing the overall competitiveness of Vietnamese retail enterprises.

Overall, due to the high penetration of both domestic through M&A and foreign retailers by FTAs, the threat of new entrants is considered a strong force in the retail industry

Vietnam's retail market has experienced significant growth, driven by heightened excitement and substantial investment from global retailers This influx of investment has intensified competitive pressure within the domestic retail landscape.

The level of competition in the industry is influenced by the number of potential competitors Key players include domestic and international chains such as Saigon Coop, Mobile World Investment Corporation (thegioididong), VinCommerce, Central Retail Vietnam, Phu Nhuan Jewelry, AEON, and LOTTE These retailers operate in multiple formats, enhancing their market presence.

In 2029, the company diversified its operations across various categories and expanded its distribution channels, transitioning from traditional trade formats like wet markets and local grocery stores to modern trade avenues, including hypermarkets, supermarkets, and convenience stores.

To drive retail development and scale, a robust and interconnected network is essential The ability to expand these networks hinges on financial resources and the capacity to identify and invest in prime locations However, over 60% of retail businesses are small to medium-sized enterprises with limited management capabilities and competitiveness, intensifying competitive pressure among larger retail players striving to increase their market share.

Retailing encompasses a diverse array of goods and services, rather than focusing solely on a single category This diversity highlights the significant threat posed by substitute products and services within the retail sector.

E-commerce is emerging as a viable alternative to modern retail formats, offering products with identical qualities and prices, which encourages customers to shift towards online shopping The COVID-19 pandemic has significantly influenced this trend, as consumers appreciate the convenience of e-commerce, allowing them to shop without the need for face masks or social distancing measures typically associated with in-store experiences.

Retailers face significant pressure from customers, as the cost of switching from one retailer to another, such as MWG to Coopmart or Vinmart, is nearly negligible Consumers can easily access a variety of sellers in traditional wet markets and local shops, making price and customer service crucial for retail survival The success of new retailers is directly linked to their ability to attract customers A notable example is the consumer boycott of Bach Hoa Xanh during the fourth COVID-19 outbreak, highlighting the importance for retailers to focus on understanding customer behavior and satisfaction.

30 result, businesses need to adjust their policies and plans, especially selling prices, to balance the interests of businesses and customers

Mobile and electronics retailers face limited bargaining power with suppliers due to the strong brand recognition of those suppliers Similarly, jewelry retailers experience low bargaining power as they primarily import gold bars and gems In the grocery retail sector, bargaining power remains low as retailers typically engage with small, specialized groups of farmers.

The surge in mergers and acquisitions has prompted numerous enterprises to develop in-house production of agricultural products, foodstuffs, and consumer goods This strategy allows them to streamline the supply chain by minimizing intermediaries, lowering costs, and enhancing price competitiveness in the market, effectively diminishing the bargaining power of suppliers.

Overall, the bargaining power of suppliers is a weak force for the retail industry.

Trends in the retail industry

3.3.1 Omnichannel retailing – integration of Online-to-Offline (O2O)

The COVID-19 pandemic has significantly altered consumer preferences and habits, leading to both temporary and potentially permanent changes As a result, the retail industry must continuously innovate and adapt its business model to meet evolving consumer behaviors.

The COVID-19 pandemic accelerated the digital transformation of retailers, prompting them to enhance online customer engagement through innovative strategies In response to the growing preference for online shopping, omnichannel retailing emerged as an effective solution, integrating physical stores with logistics services like online shopping and flexible pickup options.

In omnichannel retailing, physical stores play a crucial role in the integration of the online-to-offline (O2O) process Many businesses are transforming their brick-and-mortar locations into fulfillment hubs for online orders, effectively converting warehouses and distribution centers into omnichannel warehouses.

Omnichannel retailing is a powerful strategy that integrates online platforms with physical stores, enhancing the variety of delivery options available This approach caters to the diverse needs of consumers, making it a contemporary trend in retail.

Retail businesses are thriving in their digital transformation efforts by adopting advanced technologies They are successfully digitalizing operations and improving customer experiences through the expansion of online sales channels and enhanced delivery services.

In the post-COVID-19 era, customers increasingly prioritize convenience and safety, leading to the rise of contactless technology Retailers must develop diverse and flexible payment methods to meet the needs of various target audiences Additionally, businesses are exploring new applications such as AI, Blockchain, and IoT Major retailers are already utilizing Big Data, Machine Learning, and Robotic Process Automation (RPA) to enhance their operations The integration of technology in retail is expected to provide competitive advantages by lowering operating costs, reducing prices, and streamlining management processes.

Vietnam's retail market recently recorded strong growth momentum The dynamic of Vietnam's retail market is reflected in the successful capital injection deals from FDI into potential domestic retailers

Over 60% of retail businesses are small and medium-sized enterprises facing significant capital demands, prompting them to pursue mergers with foreign industry leaders These mergers provide access to essential investment and advanced management technologies, allowing both local and foreign firms to thrive symbiotically Foreign companies benefit from easier access to market share, retail supply chains, and established customer bases of local businesses As a result, the trend of mergers and acquisitions in the retail sector is expected to grow rapidly in the near future.

The market continues to be led by foreign investors, but it is worth noting that the proportion of M&A value of Vietnamese enterprises acting as buyers tends to

In 2016, foreign players held over 50% of the retail market share in Vietnam; however, local Vietnamese retail enterprises have since increased their presence, now accounting for approximately 70-80% of the total points of sale across the country.

In the first ten months of 2021, the domestic investor community in Vietnam generated approximately 1.6 billion USD, with 1.13 billion USD attributed to eleven transactions conducted by five major companies: Vingroup, Masan, NovaLand, Hoa Phat, and Vinamilk.

Successful domestic M&A transactions have solidified the position of Vietnamese players in the retail market, fostering collaboration among retail businesses to leverage each other's strengths Leading retailers in Vietnam are embracing multi-channel sales strategies to adapt to the digital technology era, while simultaneously enhancing their production processes This approach allows them to deliver agricultural products, food, and consumer goods directly from production to retail, minimizing intermediaries and costs, ultimately improving their price competitiveness in the market.

ANALYSIS OF THE FINANCIAL PERFORMANCE OF MOBILE

Overview of Mobile World Investment Corporation

Founded in March 2004, Mobile World Investment Joint Stock Company (MWG) has become the leading retailer in Vietnam, achieving the highest revenue and profit in the industry With a robust network of over 5,300 retail stores across the country, MWG was listed on the Ho Chi Minh Stock Exchange (HOSE) in 2014, demonstrating its significant growth and resilience, even amid the challenges posed by the COVID-19 pandemic.

19 pandemic, MWG has continuously appeared in the Top 50 best-listed companies of Forbes since its listing

MWG operates several leading retail chains across various categories, including IT equipment and mobile phones through thegioididong.com, consumer electronics with Dien May Xanh, groceries and FMCGs under Bach Hoa Xanh, and the newly launched An Khang for pharmaceutical trading.

Since its inception in 2004 as a basic e-commerce platform showcasing product details, The Gioi Di Dong has evolved into Vietnam's leading mobile phone retailer, boasting an extensive nationwide network.

Thegioididong is a leading retailer in Vietnam, offering a wide range of products including mobile phones, tablets, laptops, accessories, mobile SIM cards, and internet services By the end of 2021, the company had established 970 locations across the country, reinforcing its dominant position in the market Additionally, Iprice ranks Thegioididong as the top mobile phone retail website in Vietnam.

Established in late 2010, Dienmay.com evolved into a leading consumer electronics retail chain, rebranding as Dien May Xanh in May 2015 Each supermarket spans 500 to 1,000 square meters, focusing on a wide range of household electronics and digital products, including TVs, refrigerators, washing machines, air conditioners, microwaves, and various mobile devices, tablets, computers, accessories, SIM cards, and internet services.

In July 2016, Dien May Xanh achieved nationwide coverage across all 63 provinces and cities in Vietnam The launch of mini stores, ranging from 300 to 400 square meters, has further enhanced accessibility for customers and facilitated rapid expansion of the brand.

Launched in June 2020, the Dien May Xanh Supermini (DMS) model features stores sized between 120 to 150 square meters, providing approximately 60% of stock keeping units (SKUs) for basic phones and consumer electronics This initiative focuses on delivering comprehensive after-sales service to customers in rural areas, effectively penetrating local communes that lack modern electronics outlets.

2021, Dien May Xanh had 1,992 stores nationwide, of which 800 were supermini stores Furthermore, dienmayxanh.com is also ranked by iPrice as the No.1 consumer electronics retail website c Bach Hoa Xanh

In late 2015, MWG initiated the testing of the Bach Hoa Xanh concept, a "modern wet market" designed to offer fresh goods and daily necessities By the end of 2016, the pilot phase was successfully completed, with over 40 stores primarily located in Tan Phu and Binh Tan districts, generating positive revenue and garnering favorable customer feedback.

Bach Hoa Xanh, a chain with over 2,100 locations in Southern and South-Central provinces, provides a wide selection of fresh, high-quality, and traceable-origin products at affordable prices, surpassing traditional wet markets and local grocery stores Each store is conveniently located with a hygiene area, making it an ideal shopping choice for housewives Additionally, An Khang Pharmacy complements this shopping experience.

An Khang Pharmacy is a well-established chain offering a variety of products, including medications, functional foods, and medical supplies In late 2018, MWG expanded its portfolio by acquiring a 49% stake in An Khang Retail JSC, previously known as Phuc An Khang.

After achieving significant corporate success, MWG increased its ownership stake in An Khang Retail Joint Stock Company to 99%, officially integrating An Khang's business results into its own by the end of 2021 An Khang now ranks among the top three largest drugstore chains in Vietnam, boasting 178 locations across 25 provinces in the South and South Central Coast.

4.1.2 Business development strategies a Core values

The company always appreciates and focuses on building corporate culture with the 6 following core values: (i) Being whole-hearted to customers, (ii) Integrity, (iii)

Mutual affection, teamwork, honesty regarding financial matters, a passion for work, and a commitment to quality are essential core values that underpin MWG's competitive strategy, which will be further examined in the subsequent section of this thesis.

MWG is committed to fostering a customer-centric culture and upholding integrity, continuously innovating to enhance customer experiences Additionally, MWG focuses on creating prosperity for its employees, delivering substantial returns for long-term investors, and contributing to community charitable initiatives.

Having the vision of being “MWG - The pride of Vietnam”, MWG is looking forward to targeting as the No.1 retailer in Southeast Asia (Figure 10) MWG Vision

The 2030 plan prioritizes customers and employees while focusing on MWG's commitment to delivering sustainable value to the environment and society.

In the wake of COVID-19, MWG faced significant challenges during 2020 and 2021; however, the company remarkably surpassed the USD 5 billion revenue milestone and met all its profit targets for the year This business success exceeded expectations, with online revenue soaring by over 53% compared to 2020 As a result, MWG has emerged as the leading company in Vietnam's online retail market.

Competitive strategy analysis

Guided by its vision and core values, MWG implements a differentiation competitive strategy aimed at delivering exceptional value and quality products and services to its customers This approach allows the company to preserve the distinct characteristics of its brands in the marketplace, establishing a unique competitive edge.

MWG prioritizes customer satisfaction by focusing on training professional staff and enhancing website efficiency This commitment enables the company to deliver exceptional consulting services and effective aftercare, ultimately improving user experience and ensuring customer satisfaction.

MWG prioritizes customer satisfaction through flexible warranty, exchange, and return policies, fostering trust and enhancing its market reputation This commitment has led to a strong base of loyal customers However, the high costs associated with exceptional customer care contribute to higher product prices compared to other retail stores.

 Research and Development (R&D): R&D is an effective tool to help MWG develop its multi-retail chains and create trust in the hearts of customers This is evident

Figure 9 MWG's statements of vision by 2030 (Source: mwg.vn)

MWG has successfully enhanced its branding by experimenting with new store formats and product lines, while continuously updating its retail websites to improve customer interaction These efforts in research and development have effectively captured customers' attention across various categories, addressing their diverse needs.

MWG distinguishes itself from competitors by prioritizing expansion into rural provinces and cities rather than concentrating solely on large urban areas This innovative strategy has allowed MWG to establish a nationwide presence, enhancing its brand visibility and providing greater opportunities to engage with a diverse customer base.

The expansion of MWG's target audience beyond urban areas has fostered a friendly and approachable brand image, capturing significant consumer attention This strategic approach differentiates MWG from its competitors in the retail industry, while its extensive nationwide store network enables the company to effectively connect with diverse consumer segments.

Corporate analysis: SWOT analysis

MWG's success in expanding its extensive retail network and entering various categories is rooted in its expertise in management and a robust financial foundation The company actively drives scale transformation by adapting and implementing diverse store formats while strategically closing outdated locations, allowing it to effectively cater to customers across different regions.

MWG's ability to navigate the challenges posed by the COVID-19 pandemic can be attributed to its keen market insight, strong long-term relationships with suppliers, and stable cash flows These key advantages have enabled MWG to proactively secure and manage supplies, setting it apart from other retailers during this crisis.

MWG holds a significant position in Vietnam's technical consumer goods retail market, boasting market shares of 45% in mobile phones and 35% in consumer electronics This dominance is further strengthened by its extensive network of retail systems, allowing the company to capitalize on economies of scale.

With over 5,300 stores nationwide, MWG's extensive scale serves as its primary competitive advantage in the industry This allows MWG to import directly from manufacturers in large volumes, benefiting from significant discounts Additionally, its expansive distribution network optimizes the transportation process, enhancing overall efficiency.

Brand recognition and diversity are crucial competitive advantages for businesses, particularly in the consumer goods and retail sectors MWG has established its identity and market position through the successful development of renowned chains like thegioididong.com, Bach Hoa Xanh, and Dien May Xanh With over 5,300 stores nationwide, MWG has built strong customer trust and loyalty Additionally, the company’s strength lies in its workforce of more than 74,000 well-trained employees, who possess technical expertise and professional skills, enabling MWG to deliver exceptional customer care and post-sales services.

MGW is a leading company in Vietnam that has integrated enterprise resource management (ERP) systems into the management of its retail store chains Notably, its ERP system is developed in-house, providing MGW with a robust technological foundation that enables proactive and secure operation and management of its systems.

MWG has successfully adopted an Omnichannel retail strategy by harnessing its technological strengths, focusing on continuous innovation to create unique shopping experiences This approach simplifies online purchasing, allowing consumers to shop more quickly and conveniently while enhancing their connection to the MWG brand portfolio.

In 2016, Dien May Xanh's television commercial (TVC) featuring vibrant dancing blue characters and catchy music made a significant impact on consumers, effectively enhancing the brand's identity and recognition.

MGW's effective communication strategies and successful marketing efforts have positioned this emerging brand as a market leader, significantly outpacing its competitors.

The domestic phone and consumer electronics retail industries are experiencing significant industry saturation, leading to a slowing growth rate This presents a considerable challenge for MWG in maintaining its double-digit growth, particularly given its substantial market presence in these sectors.

Nguyen Duc Tai, Chairman of MWG, underscores the significance of employees, placing them second only to customers in the company's priorities Despite this strong human resource management policy, MWG faces challenges in attracting external talent, as the majority of store managers and senior executives are promoted from within Mr Tai highlights that while some external hires do exist, the integration of new talent into the company's culture remains a hurdle.

The retail industry, particularly major retailers like MGW, is significantly impacted by the macro-environment, especially during crises such as the Covid-19 pandemic in 2020 and 2021 Thegioididong.com and Dien May Xanh faced severe challenges due to supply chain disruptions, store closures, and workforce shortages, leading to the temporary closure or restriction of nearly 2,000 locations This situation drastically affected their sales and cash flow, while Bach Hoa Xanh and An Khang were among the few business chains allowed to continue operations during this period.

First, retail – is a promising industry in the post-pandemic period After nearly two years of declining economic growth, the Vietnamese economy is now in recovery

The retail industry, boasting one of the highest compound annual growth rates (CAGR), is poised to play a significant role in Vietnam's economic recovery Following the COVID-19 pandemic, improving market sentiment and stabilizing customer attitudes indicate strong recovery potential for this sector This positive growth trend presents an opportunity for MWG to swiftly develop and implement innovative business strategies to capitalize on the forthcoming resurgence in retail.

Second, large population and improving per capita income According to the

In 2021, Vietnam's population exceeded 98.5 million, with 37.1% residing in urban areas, reflecting a positive growth trend driven by rural-to-urban migration for education and job opportunities Additionally, the average per capita income increased by over 8% annually, highlighting the country's economic progress.

From 2016 to 2020, Vietnam experienced a rise in urbanization and per capita income, which is projected to continue, consequently boosting the retail market's value Capitalizing on these favorable trends, MWG has diversified its business by launching new chains, including AVAKids, AVASport, AVAFashion, AVAJi, and AVACycle.

Accounting analysis

MWG, a prominent listed company in the retail sector, focuses on trading a diverse array of goods, with key accounting policies centered around inventory, revenue, receivables, and borrowing costs The company's expansion of store locations has brought prepaid expenses and leasing criteria into focus Additionally, MWG's recent mergers and acquisitions, along with investments in various projects, underscore the importance of its business combination policies.

& goodwill, and investment have been taken into account Hence, an appreciation of critical accounting policies is necessary to understand their financial results a Inventory

Inventories are recorded at the lower of cost or net realizable value (NRV), which includes all purchase costs and direct expenses associated with getting each product to its current location and condition NRV is defined as the estimated selling price in the normal course of business, minus the estimated costs required to complete the product and the expenses necessary for the sale.

An inventories provision is created for the estimated loss arising due to the impairment of value (through diminution, damage, obsolescence, etc.) of inventories

The Group recognizes impairment for 43 owned assets based on relevant evidence available at the balance sheet date Any adjustments to the provision balance are reflected in the cost of goods sold (COGS) within the consolidated income statement Additionally, revenue is recognized in accordance with established accounting principles.

Revenue is recognized when it is likely that economic benefits will be received by the Group and can be measured reliably It is assessed at the fair value of the consideration received or expected, excluding any trade discounts, rebates, or sales returns.

Receivables are presented in the consolidated financial statements at the carrying amount due from customers and other debtors, after provision for doubtful debts

The provision for doubtful debts reflects receivables that are uncertain to be collected by the balance sheet date Any changes in this provision balance are recorded as general and administrative expenses in the consolidated income statement.

Borrowing costs, which include interest and associated expenses incurred while obtaining funds, are recognized as an expense in the consolidated income statement for the year in which they arise Additionally, prepaid expenses represent costs paid in advance for services or goods to be received in the future.

Prepaid expenses are classified as either short-term or long-term on the consolidated balance sheet and are amortized over the relevant year in which the payment is made or when the associated economic benefits are realized.

Determining if an arrangement qualifies as a lease involves assessing its substance at the inception date This evaluation focuses on whether the fulfillment of the arrangement relies on the use of a specific asset and if it grants the right to utilize that asset.

Business combinations are recorded using the purchase method, where the cost is determined by the fair value of the assets transferred, equity instruments issued, and liabilities assumed at the exchange date, along with any directly related costs Initially, identifiable assets, liabilities, and contingent liabilities in a business combination are assessed at their fair values as of the business combination date.

Goodwill in a business combination is measured at the cost, which is the excess of the total acquisition cost over the Group's share of the net fair value of the identifiable assets, liabilities, and contingent liabilities of the acquired entity If the acquisition cost is lower than the fair value of the subsidiary's net assets, the difference is recognized directly in the consolidated income statement Following initial recognition, goodwill is recorded at cost minus any accumulated amortization.

MWG accounts for its investment in associates using the equity method, which applies to entities where it holds significant influence but is neither a subsidiary nor a joint venture Typically, MWG considers it has significant influence when it owns more than 20% of the voting rights Under this method, the investment is recorded on the consolidated balance sheet at cost, adjusted for any post-acquisition changes in MWG's share of the associate's net assets.

Held-to-maturity investments are recorded at their acquisition cost and, following initial recognition, are evaluated based on their recoverable amount Any impairment losses are recognized as expenses in the consolidated financial statements and are deducted from the investment's value.

A provision for the diminution in value of investments is established when there is credible evidence indicating a decrease in their value at the balance sheet date Any adjustments to this provision, whether increases or decreases, are reflected as finance expenses in the consolidated income statement.

Flexibility can be found in the core accounting strategy of MWG such as inventory accounting policies, and depreciation policies

MWG employs the perpetual inventory method for tracking its diverse range of inventories, utilizing two primary valuation methods For mobile phones, laptops, and digital electronics, MWG applies actual costs based on specific identification In contrast, for other items, including accessories, household appliances, dried foods, fresh foods, beverages, grocery merchandise, and cosmetics, the company uses actual costs calculated on a weighted average basis.

Depreciation of tangible fixed assets and amortization of intangible fixed assets is calculated on a straight-line basis over each asset’s estimated useful life as follows:

Table 1 Estimated useful life of MWG's assets

(Source: Financial statements of MWG)

MWG demonstrates exceptional competence in inventory management through effective valuation methods While the weighted average method may lack precision, it proves advantageous for a multi-item firm like MWG due to its simplicity and time efficiency For high-value items such as phones, laptops, and electronic equipment, MWG employs specific identification, ensuring stringent inventory control Each product is assigned a unique IMEI code, which not only facilitates tracking but also protects pricing against depreciation as products become outdated.

Financial analysis

In 2020, the retail sector faced unprecedented challenges due to the COVID-19 pandemic, resulting in significant declines for many businesses Despite this difficult landscape, MWG reported a consolidated net revenue of VND 108.5 trillion, reflecting a 6% year-on-year increase, and achieved nearly VND 4 trillion in NPAT, up 2% from 2019 This performance allowed MWG to fulfill 99% of its revenue target and exceed its profit plan by 114%, establishing it as one of the few companies in Vietnam to sustain growth since its inception, even amidst the pandemic's adverse effects.

Figure 10 MWG’s net revenue and net profit after tax (NPAT) in the 5-year period from 2017 to 2021 (Unit: VND trillion)

Despite the challenges posed by the fourth COVID-19 outbreak in 2021, MWG demonstrated remarkable recovery, achieving significant growth The company recorded nearly VND 123 trillion in net revenue and a net profit after tax (NPAT) of VND 4.9 trillion, reflecting year-over-year increases of 13% and 25%, respectively These impressive results exceeded expectations and further fueled the company's growth trajectory.

Despite the challenges posed by the COVID-19 pandemic in Vietnam, MWG managed to maintain its financial stability without incurring any losses This achievement sets the company apart from its competitors, highlighting its robust financial foundation and long-term sustainability, which can be attributed to the dedicated efforts of its entire workforce.

Table 2 Summary of MGW’s assets and liabilities from 2019 to 2021

At the end of 2020, MWG's total assets increased by over 10% year-on-year, reaching VND 46,031 billion, primarily due to a 30% rise in long-term assets This growth was significantly driven by a 35% increase in fixed assets resulting from the expansion of its store chain Meanwhile, current assets grew by only 7% compared to 2019; however, short-term financial investments surged by 157%, including short-term deposits, bonds, and loans The pandemic prompted MWG to prioritize safe investments to accumulate capital for future recovery, leading to a 25% decrease in inventory, which fell to VND 6,323 billion.

At the end of 2021, total assets approached VND 63,000 billion, reflecting a significant 37% year-on-year growth Current assets surged nearly 40% from 2020, with a notable 39% increase in 2021 compared to just 7% the previous year, driven primarily by a remarkable 77% rise in short-term financial investments Current account receivables also saw a substantial increase of over 98%, bolstered by supplier discounts and installment sales via consumer finance companies, with MWG confident in the recovery of these funds Non-current assets rose by 26% year-on-year, while fixed assets continued to grow due to the company's expansion; however, long-term financial investments plummeted to approximately VND 53 billion, marking a complete 100% decline in these accounts.

In 2020, the company's total liabilities reached VND 30,549 billion, increasing by 3% year-over-year, while in 2021, they surged to VND 42,593 billion, marking a 39% rise MWG's total debt, encompassing both short-term and long-term loans, rose over 18% to approximately VND 16,752 billion by the end of 2020, and escalated by more than 60% to over VND 24,647 billion by the end of 2021 This significant increase in total debt was primarily driven by a rise in short-term debt, which grew from over VND 15,625 billion in 2020 to VND 24,647 billion in 2021, largely to bolster inventory in preparation for the Tet holiday amid global supply shortages due to COVID-19 uncertainties.

The long-term debt of MWG remained stable at around VND 1,120 billion in

In 2017, MWG issued a bond with an average annual coupon rate of 6.55%, set to mature in November 2022 However, by the end of 2021, this bond had been converted into short-term loans, resulting in a recorded long-term debt of zero.

4.5.3 Key financial indicators a Analysis of return

Figure 11 provided information about the return ratios of MWG in the three consecutive years Both the ROA and ROE ratios have experienced a decline since 2019

The Return on Equity (ROE) experienced a notable decline from 36.3% in 2019 to 28.4% in 2020, reflecting an 8% decrease, and continued to slightly drop to 27.3% in 2021 Similarly, the Return on Assets (ROA) decreased to 8.9% in 2020, with a minimal increase to 9% by the end of 2021.

This downward trend is a result of increases in owner’s equity that was driven by higher retained earnings from 2020 and

In 2021, total assets surged to VND 62,971 billion, yet the Return on Assets (ROA) remained lower than the previous year Despite Bach Hoa Xanh being positioned as the primary growth driver for MWG during the pandemic, it was still in its investment phase in 2020 and had not yet achieved substantial profitability.

Despite the challenges posed by the COVID-19 pandemic, MWG demonstrated a significant improvement in its profitability indicators The gross profit margin rose from 19.1% in 2019 to 22.1% in 2020, stabilizing around 22.5% by the end of 2021 This enhancement in gross margin can be attributed to MWG's effective economies of scale.

Figure 12 MWG's profitability ratios from 2019 to 2021

51 in negotiating better trade terms with suppliers and the effort of utilizing procurements costs, diversifying product assortments, and focusing on exploiting high-profitability products

In 2020, the operating margin experienced a slight increase of 0.1%, rising from 5.4% in 2019 to 5.5%, and then it moderately improved to 5.8% in 2021 In contrast, the net profit margin declined from 3.8% in 2019 to 3.6% in 2020.

2020 before rising back to 5.8% in 2021

In 2020, MWG experienced significant fluctuations in key financial indicators due to its aggressive expansion of store locations, the introduction of new retail formats, and increased investments in logistics and backend systems This rapid growth led to a substantial rise in selling, general, and administrative (SG&A) expenses in the short term Additionally, deferred tax income surged to over VND 109 billion, marking a remarkable 249% increase compared to 2019, which contributed to a decline in the net profit margin for the year.

On the other hand, the year 2021 had all witnessed an improvement in all three ratios, implying a healthy recovery of MWG post-COVID-19 c Analysis of efficiency

Figure 13 provided data on the efficiency ratios of MWG, including total assets turnover, inventory turnover, and working capital turnover from 2019 to 2021

The rate of inventory turnover fluctuated mildly from 3.8x in 2019 to 3.7x in

In 2020, MWG's inventory experienced a slight decline, likely due to COVID-19 disruptions, before rebounding to 3.9x in 2021 Despite the challenges posed by the pandemic, the overall stability of inventory levels during this period indicates that MWG's inventory management was both well-monitored and effectively executed.

Table 3 MWG's asset turnover in comparison with its peers

During the analyzed period, both total assets turnover and working capital turnover for MWG experienced a decline Total assets turnover peaked at 2.9x in 2019 but fell to 2.5x in 2020 and further decreased to 2.3x in 2021 A comparison with major competitors, Phu Nhuan Jewelry (PNJ) and FPT Retail (FRT), revealed a similar downward trend in their asset turnover However, MWG consistently outperformed its rivals in this metric.

MWG experienced a decline in working capital turnover, decreasing from 15.8x in 2019 to 13.9x in 2020, and further to 13.3x in 2021 This trend suggests that the company prioritized investments in short-term assets and inventory to enhance its sales performance.

However, the decline in this ratio eventually meant that MWG was less efficient in using its working capital under the influences of the COVID crisis d Analysis of liquidity

CONCLUSION AND RECOMMENDATIONS

Conclusion

The retail market in Vietnam experienced a decline starting in February 2020 due to the COVID-19 pandemic, with significant downturns during outbreaks in April and July However, a recovery began in September 2020 following the lifting of social distancing measures The situation worsened again in May 2021 with a new COVID-19 variant, leading to strict lockdowns in key economic regions by July, which severely impacted retail operations and growth rates Despite these challenges, the retail industry continues to play a crucial role in the distribution of goods and the link between production and consumption.

The drastic changes in the external environment due to COVID-19 have caused different impacts on the business of the retail industry, both positive and negative aspects

The crisis has significantly transformed consumer behavior both in the short and long term, instilling widespread fears about health, job security, quality of life, and financial stability In response to these concerns and reduced incomes during the epidemic, consumers have tightened their spending, focusing on stockpiling essential items and groceries This shift in priorities has directly impacted retail sales, leading to further challenges for businesses.

The crisis has led to a significant disparity in the performance of various retail sectors, with some experiencing severe downturns while others thrive Essential retail businesses, such as food and daily necessities, remained operational during social distancing measures, whereas many durable goods retailers, including those selling gold, silver, gems, and digital electronics, faced mandatory closures.

Retail businesses are grappling with significant supply chain disruptions and transportation challenges due to nationwide social distancing measures and the ongoing epidemic These factors have directly impacted the movement and availability of goods, complicating operations for retailers.

Manufacturers and retailers face significant challenges in the supply chain, including interruptions and increased costs Retailers are compelled to seek alternative suppliers, which leads to higher transportation expenses due to unloading and driver changes This process not only incurs testing costs but also results in financial losses while they strive to maintain stable prices for various commodities Additionally, delays at inter-provincial checkpoints extend delivery times, causing goods to arrive at supermarkets slower than anticipated.

The Covid-19 pandemic has significantly accelerated the growth of e-commerce and online shopping, posing challenges for retailers to meet customer demands while maintaining quality and timely delivery The surge in online orders has overwhelmed many businesses, leading to website and app overloads, as well as issues with discount codes Additionally, a shortage of staff and technological resources has hindered order processing, causing delays in deliveries.

During Vietnam's economic recovery, the retail industry has emerged as one of the fastest sectors to rebound, despite suffering significant setbacks during periods of social distancing This rapid recovery can be attributed to several key factors.

Vietnam has distinguished itself as a rising star in managing the pandemic, leading to a robust economic recovery and increased potential for foreign direct investment (FDI) This effective response has fostered positive momentum in the retail industry, positioning Vietnam as an attractive destination for investors.

Secondly, participating in FTAs not only expands the market for the retail industry in Vietnam but also brings about the trend of diversifying supply sources

Furthermore, in the context of COVID-19, these global agreements have created motivation for domestic retailers to look at their limitations and thereby comprehensively innovate to improve competitiveness

The retail industry in Vietnam has shown remarkable flexibility in adapting to the challenges posed by COVID-19, leading to a swift recovery fueled by the country's strong social dynamics With a large and youthful population, Vietnam continues to be a promising retail market, characterized by consumers who rapidly adjust to changing circumstances.

Finally, although direct shopping revenue decreased under the impact of COVID-

The retail industry is experiencing a positive shift due to the rise of e-commerce and online shopping With a growing number of internet and smartphone users, coupled with increasing incomes and a burgeoning middle class, the sector is poised for recovery and growth.

MWG, a leading retailer in Vietnam, faced significant losses during the COVID-19 pandemic, leading to the temporary closure of nearly 2,000 stores under Thegioididong.com and Dien May Xanh, severely impacting revenue and cash flow In contrast, Bach Hoa Xanh and An Khang emerged as key distribution chains for groceries, medicine, and daily essentials in COVID-19 hotspots However, MWG struggled with disrupted supply chains and restricted inter-provincial traffic, resulting in supply shortages and limited human resources.

Despite the challenges posed by the epidemic, MWG has adeptly seized opportunities to expand its retail chains while maintaining strong business performance The company's foresight in anticipating supply shortages, coupled with effective negotiations with suppliers and the strategic expansion of its nationwide network, has positioned MWG for a robust recovery.

MWG stands out as one of the few retailers to achieve growth despite the challenges posed by the epidemic While its growth rate is lower than in pre-epidemic years, this still highlights MWG's financial resilience and adaptability during a global crisis.

Recommendation

5.2.1 Recommendations for the Vietnam retail industry

The COVID-19 pandemic has presented numerous challenges for retail businesses, yet it also offers an opportunity for evaluation and growth This crisis has prompted companies to reassess their limitations, fostering innovation to mitigate risks, enhance operational efficiency, and better satisfy consumer needs.

In the fiercely competitive retail industry, adapting to the evolving customer needs and prioritizing convenience and shopping experience are crucial for business success in the new normal To thrive, enterprises must continually redefine their strategies to meet these demands.

The COVID-19 pandemic has accelerated digital transformation in businesses, prompting them to adopt technology to optimize operations and enhance customer experiences This shift includes expanding online services and integrating sales delivery from stores and supermarkets, while also offering diverse, flexible payment options to cater to a broad spectrum of customers.

(ii) Implement consumer stimulant initiatives, such as promotions and increased social media advertising to enhance the shopping environment, improve service quality, and so on

The pandemic has accelerated the adoption of omnichannel retail strategies, leading many retailers to explore innovative models such as shop-in-shop concepts, multi-brand stores, and automated self-checkout systems Additionally, the integration of financial services, including traditional banking and digital payment solutions, is becoming increasingly prevalent in retail environments.

(iv) Diversifying products, suppliers, and control input quality to ensure continuous supply: Re-evaluate company strategy regularly with the help of business partners, and generate private label products

Implementing a sustainable development strategy is essential for effective environmental protection This includes offering products made from recycled materials, utilizing eco-friendly packaging, organizing environmental festivals, and creating an environmental fund Additionally, modifying building designs and incorporating energy-efficient equipment play crucial roles in promoting sustainability and reducing ecological impact.

Despite the difficulties caused by business interruption due to the impact of the COVID-19 outbreaks, the continuous growth in business results of MWG since its

58 establishment until now has proved the outstanding strength of MWG as a leader in the retail industry

In 2021, MWG marked a significant recovery by achieving a milestone of USD 5 billion, prompting the company to set ambitious targets for 2022, aiming for revenue of VND 140,000 billion and a net profit after tax (NPAT) of VND 6,350 billion, reflecting increases of 14% and 30% respectively compared to 2021 levels To achieve these goals, several strategic recommendations are proposed for MWG's consideration.

MWG should prioritize selling high-volume products to boost revenue and profit, rather than concentrating on profit margins, especially during times when consumers are tightening their spending and resources are limited.

Leveraging technological advancements is crucial for enhancing online sales through the Omnichannel model By continuously innovating and refining this approach, MWG can create unique shopping experiences that simplify customer interactions across its online platforms This strategy not only facilitates quicker and more convenient transactions but also fosters customer loyalty.

Thirdly, MWG’s cash inflow is still dominated by thegioididong.com and Dien

To enhance its market presence in the mobile phone and electronics sectors, MWG plans to boost its market share by increasing the number of Dien May Xanh Supermini stores and expanding the Topzone chain, which serves as an authorized retailer for Apple products in Vietnam.

To enhance Bach Hoa Xanh's performance, MWG should focus on optimizing backend operations, improving customer service initiatives, and increasing both revenue and operational efficiency at each store This approach will establish a strong foundation for the nationwide expansion of the Bach Hoa Xanh network, necessitating increased investments in the brand's growth.

An Khang by funding and dedicating leadership to hasten the development of this pharmaceutical chain

MWG must diligently oversee and manage the performance of its new investment sectors, including the AVA chain, Conscientious Installation – Repair – Maintenance Services Company, Fully Trusted Logistics Services Company, and the safe agriculture initiative, 4KFarm.

The study by Al-Awadhi et al (2020) investigates the effects of the COVID-19 pandemic on stock market returns, highlighting the relationship between death rates from contagious infectious diseases and financial markets Published in the Journal of Behavioral and Experimental Finance, the research reveals significant insights into how the virus has influenced investor behavior and market performance during this unprecedented global crisis The findings underscore the importance of understanding the psychological and economic impacts of infectious diseases on financial systems For more details, refer to the article available at https://doi.org/10.1016/j.jbef.2020.100326.

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