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Covid-19: a reform opportunity for Vietnam’s retail industry

Covid-19: a reform opportunity for Vietnam’s retail industry

Tuesday 21, 04 2020
The Covid-19 pandemic is an opportunity for businesses to reform their operation behavior, improve consumer service and build brand in a sustainable manner.

Total retail sales of goods and services have decreased

The Covid-19 pandemic has caused many businesses to stop operation to maintain social distance. Retail is one of the most severely affected sectors by this pandemic. A report on the damage suffered by retail business published by the Ministry of Industry and Trade recently shows that the Covid-19 epidemic has a direct impact on the business performance of retailers and distributors.

Accordingly, the total retail sales of goods and services in the first 3 months was estimated at VND 1,246 billion, up 4.67% compared to the same period in 2019. This is the lowest increase in recent years. In March alone, total retail sales of goods and services decreased by 0.8% over the same period last year. This is the first decline in the period 2016 - 2020.

Decreased purchasing power caused the whole retail industry to “tumble”. Many big supermarkets such as Lotte, Co.opmart, Intimex, Aeon Mall ... have been in a serious crisis situation as there was a time when their revenue dropped by 50%.

Specifically, Lotte's sales in February 2020 decreased by about 50% compared to the previous month and decreased by more than 20% compared to the same period in 2019. As for Aeon Mall Vietnam, January’s sales decreased by 2%, and February’s sales decreased by 6% compared to the plan. Saigon Co.op Mart witnessed a 50% decrease in retail sales in the first 2 months of this year compared to the same period last year.

The loss that this business will have to suffer may be VND 1,000 billion if the epidemic is controlled in the second quarter, and VND 2,000 billion if the pandemic is nowhen to stop. Similarly, during this period, retail sales of Saigon Trading Group - One Member Limited decreased by about 50% compared to the same period last year.

According to the statistics of Aeon Mall Vietnam, the number of visitors to this mall has decreased by 20-35%, and items sold have slowed down. Only fast food products, instant foods, dry products, masks, antiseptic hand sanitizer are sold faster and the number of each purchase is greater than before.

Fashion, shoes, electronics, etc. products are almost no longer on people’s shopping lists. At the same time, due to the outbreak, workers in some fields have to leave work, so many families have to tighten spending and go shopping less often, which greatly affects the sales of the retail industry. Economic experts say that savings is necessary for every family in the current context.

This is also a challenge posed to businesses in actively understanding consumers’ behavior to adjust production and business plans in line with market fluctuations to maintain operations and overcome difficulties caused by the Covid-19 pandemic.

Covid-19: a reform opportunity for Vietnam’s retail industry

Opportunity to reform

According to retail expert Vu Vinh Phu, this is a huge challenge that the retail industry must overcome in this tough time. However, it is also an opportunity for the retail industry to look back on itself to be more innovative in organizing the purchasing and selling of goods to serve society more effectively.

First of all, the retail industry must reform itself comprehensively, and overcome shortcomings to improve business performance. Mr. Phu said that the quality of goods must be improved, especially in supermarkets and trade centers where consumers often place the highest trust.

In terms of prices, it is necessary to revise unreasonable prices caused by subjective and objective reasons in order to set prices to a level that is acceptable to the market and highly competitive among sale channels. “This can be considered as an opportunity to renew the attitude of staff when serving consumers, and to build brand in a sustainable manner.

Business culture must be more appreciated. During this period, acts of selling goods to take advantage of diseases to seek personal profits must be criticized and handled in time. The relationship between retailers, suppliers and manufacturers must be equal. They should do business with responsibility, and support each other, especially in difficult time like this.” Mr. Vu Vinh Phu emphasized.

​>> Top 10 retail companies in Vietnam

Source: thesaigontimes

Categories
Industry Report

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