Competition heats up as convenience stores race for dominance in Vietnam

By Minh Son   June 24, 2017 | 07:30 pm GMT+7

With a slate of brands operating nearly 2,000 stores, the remaining space for expansion is limited.

The first outlet of 7-Eleven, the largest convenience store chain in Japan, opened in Vietnam last week with a lot of fanfare.

Thousands of people lined up and squeezed into the small shop in downtown Ho Chi Minh City, trying to buy snacks and light meals.

The chain has said it will open around 20 outlets in Vietnam by the end of this year and 100 in the next three years.

The important question here is not about whether similarly big crowds will be coming to its stores in the future. It's where to put these stores.

7-Eleven is entering a market that has become increasingly packed in recent years. Its arrival is intensifying the heated competition for both customers and for retail space.

After all, the choice of location can make or break a convenience store. In big cities, many of the best spots are either too expensive or already taken.

Crowded market

The A.T. Kearney’s Global Retail Development Index this month named Vietnam the sixth most attractive retail market. The country made headlines worldwide when it topped this list in 2008.

The market has drawn a lot of foreign players who are now occupying 70 percent of the convenience store segment.

The American chain Circle K is operating around 250 stores, mostly in the country’s two biggest cities Ho Chi Minh and Hanoi.

FamilyMart, Japan’s second largest convenience store chain, now has 130 stores in Ho Chi Minh City, the nearby resort town of Vung Tau and in Binh Duong Province. It aims to expand the network to 150 locations by the end of this year.

Southeast Asian chains Shop&Go and B’s mart are running another 300 stores.

The dominant local player VinMart+, an offshoot of conglomerate Vingroup, has quickly expanded its network from 500 outlets in 2015 to around 900 last year. The chain plans to round up the number to 1,000 this year or next.

According to industry insiders, setting up a convenience store is much simpler than a supermarket but in order to launch a profitable chain, it takes a lot of money and efforts.