Retailers struggle to cope as Covid rages

According to a report by Viet Dragon Securities Corporation, consumer goods producers and retailers like Mobile World and Masan Group are expected to grow strongly in the second half of this year.

Leading retailer Bach Hoa Xanh made revenues of nearly VND4.24 trillion ($184.3 million) in July, up 55 percent against June, and 133 percent against July 2020. The number of its customers and volume of its sold fresh groceries more than doubled against previous months. The average revenue of each Bach Hoa Xanh store in July reached the biggest-ever monthly level.

Bach Hoa Xanh’s revenues in July contributed 45 percent of parent company Mobile World’s total, surpassing the contribution of the group’s mobile phone and electronics segments for the first time.

However, Mobile World leaders are not optimistic. "More stringent social distancing in many localities is expected to negatively affect our business performance in August. If social distancing prolongs in the remaining months of this year, it would be hard for us to realize our business plans," the group’s representative told investors at on online meeting late last week.

The recent growth has mainly come from sales of essential goods with low net profit margins. Meanwhile, sales of other goods have been gloomy.

According to its report on Vietnam’s retail sector after the first wave of Covid-19 broke out in mid-2020, market research firm Kantar Worldpanel concluded Vietnamese consumers cut spending on luxury goods and outdoor activities, shifting to essential items like fresh groceries and packed consumer goods during social distancing.

Empty shelves at a Bach Hoa Xanh store in HCMC’s Thu Duc City on July 14, 2021. Photo by VnExpress/Quynh Tran

Mobile World Chairman Nguyen Duc Tai predicted smaller incomes would weaken purchasing power not only this year, but also next year, and even during the 2023-2024 period.

"Only when workers return to work, and tourism and production recover, can we expect purchasing power to increase," he told investors at an online meeting late last week.

According to General Statistics Office, total goods retail sales and consumer service revenues in the first half of this year increased 4.9 percent over the same period last year. But, total goods retail sale in July dropped 8.3 percent against June, and fell nearly 20 percent against July 2020.

In July, Mobile World’s revenues rose 10 percent against the same period last year, but its profits declined 29 percent.

According to statistics from World Bank, by the end of 2018, modern department stores in Vietnam gained a retail market share of only 10 percent. According to the Viet Dragon Securities Corporation report, traditional markets in the country will not be replaced, though more and more mini supermarkets and supermarkets would sprout.