New 24-hour convenience stores are opening up in Ho Chi Minh City, taking over major vending venues left vacant by a sluggish economy.
Late last month, Japanese franchise chain FamilyMart opened a store on Le Van Sy Street, its 25th upon returning to Vietnam in July.
It had earlier sold its part in 41 outlets shared with Vietnamese retailing group Phu Thai to Thailand leading retailer Berli Jucker Corporation, which relabeled them “B’s mart.”
A FamilyMart store had opened on Pho Duc Chinh Street in the heart of the commercial hub last December, just a 100-meter or so from a B’s mart outlet.
Industry insiders attribute the chain’s successful return not only to the company’s deep pockets, its long experience (since 1981) and its efforts to gain back its reputation, but also the availability of vending venues, according to a Thoi bao Kinh te Saigon report.
Many big streets, both in downtown HCMC and its outskirts, are lined with signboards advertising space for rent. Many of these venues used to be company offices or fashion stores, with sufficient area for convenience stores.
The report cited an unnamed representative of the city-based Shop & Go chain, which has 85 stores in Hanoi and HCMC, as saying the time has come for 24-hour convenience stores as there are many more good location options than before.
However, although street venues are past their heyday, the rents are still high, especially in the downtown districts 1 and 3, the representative said.
House owners in the downtown area are well aware of the value of their location and are not under the pressure of having to rent at any price, like companies building houses for rent with bank loans, the source said.
“In many cases, when we ask to rent a place, the owners quote a high price saying this has been offered by another chain, and that we have to top it to get the place.
“We can bring the prices down a bit in districts like Tan Binh and Phu Nhuan, but even there, it takes a lot of bargaining.”
The source said rent for a store of 30-40 square meters on main roads is around VND40 million (US$1,900) a month.
Ngo Viet Hung, chief retailing manager at Saigon Trading Group (Satra), told the newspaper its Satrafoods convenience store of 120-160 square meters costs VND100-200 million in rent per month.
Hung said although rent is still a pressure point, there are more options now and the retailers can recharge their investment strategies.
With the widening of choices, Shop & Go and Satrafoods have established special units to find venues for expanding their chains.
Hung said Satrafoods used to have one unit for searching venues, furnishing stores and getting them up and running. But a year on, it has rearranged this to have one focusing only on finding new venues with potential.
Some chains have hired professional real estate companies to search for new venues and negotiate rents, which is an expensive method, insiders say, but add that it saves a lot of time and is more effective.
A January report by Savills Vietnam said demand for space in the supermarket and convenience store sector will remain in good health thanks to “proper and stable” operations thus far.
Source : Thanh Nien Daily | February 6, 2014