7-ELEVEN EXPANDING FOOTPRINT IN VIETNAM
Japanese-owned chain targets to open 100 outlets within the next three years
FOR decades, Vietnamese have shopped, snacked and hung out at the country’s traditional markets: colourful, chaotic mazes of open air stalls where vendors hawk everything from fruits and vegetables, to sandwiches and sodas to the odd clucking chicken.
Seven-Eleven (7-Eeleven) is pushing a different model. The Japanese-owned chain in August opened its first outlet in the country, an air-conditioned, WiFi-equipped oasis in downtown Ho Chi Minh City.
Since then, it’s rolled out about two locations per month, with plans for 100 within the next three years.
GS Retail Co, the giant South Korean mini-mart operator, opened its beachhead in January.
Meanwhile, local chains have announced new plans to flood the country with thousands of their own stores.
The brewing battle among purveyors of climate-controlled convenience is a measure of how far Vietnam has come since it opened to more trade and investment a decade-and-a-half ago.
Factory openings by multinationals like Samsung Electronics Co have made Vietnam a manufacturing powerhouse and helped lift average annual incomes to US$2,385 (RM9,540) from about US$400 back in 2000.
In the first half of this year the economy grew 7.1 per cent, its fastest pace in a decade.
“I see a domino effect,” said Willy Kruh, a convenience-store watcher who heads KPMG Canada’s global consumer consultancy.
“As other retailers see the success of the foreign players that have come in, it’s only going to bring in more retail, more brands, more big players.”
Lured by one of the world’s youngest consumer markets — more than half of Vietnam’s 93 million people are under 35 — foreign investors are pouring money into the country.
The Ho Chi Minh Stock Index rose to a record in April, although it’s since given up some gains.
“Growth has been phenomenal,” said Chua Hak Bin, a regional economist at Maybank Kim Eng Research in Singapore, who said he’d recently come back from a marketing trip in Europe, where clients peppered him with questions about Vietnam. “It’s definitely a rock star.”
The last few months have seen a string of record public equity offerings.
In November, there was the US$709 million raised by shopping mall operator Vincom Retail JSC.
That record stood until April, when Techcombank brought in US$922 million. A month after that, it was luxury property developer Vinhomes JSC raking in US$1.4 billion.
“You now have a young, emerging middle class looking to consume and as they do, it’ll invite more and more investment,” said Jeffrey Perlman, head of Southeast Asia at Warburg Pincus, the United States-based private equity firm which owns stakes in both Vincom Retail and Techcombank.