Auchan Failure Show Severity of Vietnam’s Retail Market

Diep Nguyen

11:31 23/05/2019

BizLIVE -

Under the circumstance of many other supermarket operators run the model of complex shopping centers with many other types of conveniences like cinemas, fastfood chains, the shopping only model of Auchan does not attract customers.

Auchan Failure Show Severity of Vietnam’s Retail Market
Lately, French Company Auchan Retail declared that it would withdraw from Vietnam’s retail market. This is the lastest European retail group operating in Vietnam at this moment.
Before that, in 2016, Casino Group sold BigC for Central Group of Thailand. Two years before, Metro Group of Germany left Vietnam after selling the retail system for TCC of Thailand after many years of poor business performance. Before leaving, Metro had 19 supermarkets in 14 provinces and cities in Vietnam, 5 storage centers and total 3,600 staffs.
Parkson also failed in Vietnam. Parkson belongs to Lion Group which was established in Malaysia in 1930. Parkson joined Vietnam’s market in 2005. In recent years, consecutive losses led Parkson to recalculate about the business in Vietnam and declared closing the trade centers. At the same time, some other domestic retailers face full of difficulties then had to sell themselves to foreign competitors like Family Mart.
It is not hard to track the reasons why Auchan failed in Vietnam. Auchan is the big European retail group with rich experience in global retail markets, Auchan currenly runs more than 900 mega supermarkets, more than 860 mini supermarkets and 370 trade centers in 16 countries. Auchan has existence in Vietnam since 2015 and used to plan to invest USD 500 million to develop supermarkets and mega supermarkets.
General Director of Auchan Retail Vietnam, Jordi Fernandez, used to share that the Vietnamese retail market is attractive with high growth rate, full of chances but also has abundant challenges for domestic and foreign investors. Auchan used to invest aggressively to open storage centers in the North and South of Vietnam, focusing on logistics and storings, services.
Consecutive annual losses led Auchan to recalculate the chances and its continuation in Vietnam. In 2018, Auchan has net loss of USD 50 million while the holding group Auchan in France has net loss of more than 1 billion euro. The withdraw of Auchan from Vietnam is the sticking point in the restructuring process of the holding group. Auchan also stopped business in Italy this time.
Under the circumstance of many other supermarket operators run the model of complex shopping centers with many other types of conveniences like cinemas, fastfood chains, the shopping only model of Auchan does not attract customers. At the same time, Auchan has to pay too high for the rents, which is 30% higher than other competitors. Loss is inevitable.

DIEP NGUYEN

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