Adding NovaGroup, the race to expand food chain stores is getting fiercer20/06/2022
NovaGroup aims to open 300 new NovaMarket stores this year and by 2025 to have 2,000 points of sale. Bach Hoa Xanh has a “speedy” expansion strategy nationwide from 2023. Both WCM, BHX and Co.op Food have not made a profit as of 2021 and recorded an accumulated loss of trillions of dong.
In mid-March, Nova Market convenience stores and food supermarkets were opened. Nova Market is a mini supermarket chain of Nova Commerce – a member of Nova Consumer of NovaGroup. Products sold here include food (fresh and frozen), beverages and nutrition. According to NovaGroup leaders, the group has the goal of opening 300 stores of various sizes this year and by 2025 more than 2,000 points of sale.
Adding NovaGroup makes the race to expand fast-moving food chain stores increasingly fierce.
In the two years 2020-2021, despite the epidemic, Saigon Co.op expands the Co.op Food chain not only in Ho Chi Minh City but also in Southern and Central provinces such as Dong Nai, Can Tho, Binh Duong, Phu Yen, Da Nang to reach the milestone of nearly 400 stores. In the first months of the year, the chain continued to open new stores in the northern provinces such as Ha Tinh and Thanh Hoa.
Saigon Co.op sets a goal in 2022 to open 100 more stores following this mini food consumables model to bring the total number to nearly 500 stores, covering from North to South. Saigon Co.op’s system includes Co.opmart supermarket, Co.opXtra hypermarket, Co.op Food store, convenience store… In the general development orientation, Saigon Co.op is expected to open from 3 to 5 retail points are supermarkets, hypermarkets and 80-100 small retail points.
The largest retail chain of food and consumer goods today is WinMart/WinMart+ belonging to WinCommerce (WCM) – a member unit of Masan Group (HoSE: MSN). By the end of the first quarter, this chain had 2,832 stores, including 124 WinMart and 2,708 WinMart+, an increase of 109 new stores in the first three months of the year and an increase of 354 stores compared to the beginning of 2021.
The group sets an ambitious target of having 4,000 stores and 170 supermarkets by the end of this year. In which, WinMart is a large supermarket similar to Co.opXtra, while WinMart+ has a model similar to a convenience store but also has fresh food products and is aiming for a multi-utility model with many accompanying services such as Techcombank, Phuc Long tea and beverages, Phano pharmacy, the new network Reddi…
The second largest retail chain of food and consumer goods is Bach Hoa Xanh (BHX) of Mobile World Investment (HoSE: MWG). Since its inception, the chain has aimed to compete with traditional markets with a high percentage of fresh products in the category. Within 3 years (2019-2021), the number of stores has increased from 1,008 to 2,106. MWG plans to temporarily suspend the opening of new stores this year to focus on improving service quality and customer experience in preparation for a “speedy” expansion plan nationwide from 2023 (currently a new BHX store in the South). However, recently, business leaders shared that they will “give the green light” to open new stores from the fourth quarter. Although it stopped opening new stores, the number of BHX stores increased to 34, increasing to 2,140 stores in the first 4 months of the year.
Being evaluated as a potential market but most of them are not profitable yet
Chain of food and fast-moving consumer goods stores serving basic human needs. Therefore, even in epidemic conditions, these chains are still active, although the form may be limited compared to normal. On the other hand, during a strong outbreak in the South, especially Ho Chi Minh City, these chains also attracted a large number of consumers when traditional markets had to close.
With a population of nearly 100 million people, the retail essentials sector in Vietnam is very potential. At the same time, according to a report by Masan Group, this field is still quite fragmented and operating inefficiently. The traditional trade channel still accounts for a large proportion of total sales, although WCM is the leading company, it only accounts for 2-3% of the total retail market for essentials and the whole modern shopping channel accounts for about 10%.
The Masan Group also believes that a revolution in modern retail is taking place and will explode in Vietnam when the urbanization rate reaches 50% and the middle class (with an average income of 5,000 USD/year) actually appears. Modern forms of shopping are expected to account for 30% of the retail essentials market in the future.
Because of the potential and room for development, retail chains such as WinMart/WinMart+, BHX, Co.op Food… are working hard to expand their market share and have not yet recorded profits. According to the data of Nguoi Dong Hanh, in the last 3 years, the 3 largest food and FMCG chains have continuously suffered losses, but their losses have gradually decreased.
Specifically, WinCommerce recorded revenue in the region of 28,000 – 30,000 billion in the period of 2019-2021. As of 2021, the owner of the WinMar/WinMar+ chain has an after-tax loss of VND 148 billion, significantly improved compared to a loss of VND 3,221 billion in 2020 and VND 524 billion in 2019 (small loss due to a sudden financial revenue loss. ). Total accumulated loss at the end of last year was at VND 3,888 billion.
With the BHX chain, revenue continuously increased sharply from VND 10,773 billion in 2019 to VND 28,216 billion in 2021. While, the after-tax loss decreased from VND 1,926 billion in 2020 to VND 1,188 billion last year and recorded a slight increase compared to the year of 2019 (1,055 billion VND). After 6 years of operation, accumulated losses of VND 4,950 billion.
Similarly, revenue of Co.op Food chain also increased significantly from 3,549 billion dong to 4,347 billion dong in the past 3 years, the loss gradually decreased from 451 billion dong to 254 billion dong. Profit after tax at the end of last year was negative 1,642 billion dong.