Mr. Leo Song (송준우) : +82-2-6000-8127
18 October, 2023
The retail market in Vietnam has experienced significant participation from both domestic and international brands in recent years. However, recent developments indicate that retailers are changing their strategies. Instead of directly investing in their retail stores, retailers are increasingly transitioning to franchise business models. The impact of franchising on the overall development of the retail market in Vietnam is becoming more evident.
There are various reasons for this shift in business strategy. Some retailers face challenges in developing new business locations, while others aim to rapidly expand their retail networks.
For example, the Emart story marked a significant shift in strategy. In September 2021, Emart completed the transfer of its only supermarket in Ho Chi Minh City to Thaco Group after years of unsuccessful efforts to develop its own stores. Emart decided to franchise its retail operations to Thaco, which is now responsible for managing, operating, and expanding Emart supermarkets. Mr. Tran Ba Duong, Chairman of Thaco’s Board of Directors, announced plans to open seven more Emart stores by 2025.
Additionally, GS Retail and Son Kim Group are pursuing franchising agreements for GS25 stores with secondary investors to rapidly expand their retail locations, aiming to reach 10,000 stores compared to the current 200+ stores.
The Circle K convenience store chain currently operates more than 450 stores nationwide, with Seven System Vietnam Joint Stock Company serving as the Master Franchisee of Circle K in Vietnam.
Saigon Co.op, one of Vietnam’s leading retailers, has also been bold in implementing franchising. Out of the approximately 300 Co.op Food stores in operation, over 20 are now operating as franchises.
WinMart/WinMart+, with a network of nearly 3,000 supermarkets and stores across 60 provinces and cities, has officially announced its franchising plans with the goal of increasing its scale tenfold by 2025.
Other convenience store chains like Ministop, Kawamart, Sakuko, and more are also pursuing franchising with the ambition of rapid expansion in major cities in Vietnam, such as Hanoi, Da Nang, and Ho Chi Minh City.
According to the KoreaTimes, Southeast Asia was once considered one of the three high-growth regions for South Korean retailers to invest in. However, South Korean hypermarkets and convenience store chains faced two significant barriers: lower-than-expected purchasing power and stringent legal regulations. These chains are now shifting towards franchising and avoiding direct ownership.
Franchising allows businesses to leverage capital and human resources from partners to expand their operations. One of the biggest challenges for foreign investors is understanding and adapting to the local culture. Therefore, franchising with Vietnamese partners is the most effective way to address this issue.
According to Mr. Sean T. Ngo, CEO VF Franchise Consulting, franchising not only benefits the franchisors but also minimizes risks for the franchisees in Vietnam and globally. Thanks to the reputation and success of large brands, products purchased from franchisees are well-received in the market and are recognized by consumers. This approach saves franchisees a significant amount of money in building their own brand and substantially reduces advertising and marketing costs. This is the reason why an increasing number of Vietnamese businesses are actively seeking new business opportunities through franchising.
With a growth rate of nearly 12% per year, Vietnam is considered one of the most vibrant retail markets in the Asia-Pacific region, following China and Indonesia. In the retail sector, convenience stores have been rapidly developing, with the participation of numerous prominent domestic and international brands.
Mr. Sean T. Ngo also mentions some of the major trends in the franchising industry in Asia include:
What is Franchise Consulting?
Franchise consulting can be very beneficial for those who are looking to start a franchise business in Asia or seeking to franchise their business throughout Asia. A franchise consultant can help you navigate the complex process with expert advice and guidance on everything from legal issues to market entry strategies.
VF Franchise Consulting is one of the top franchise consulting companies in Asia that provides a wide range of services to help you start your franchise business. They have a team of experienced international consultants who can assist you with everything from market research, site selection, training, supply chain support, to franchise development and operations.
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What is Location Intelligence?
Location intelligence involves the use of information collected about places and people, their incomes and education levels, and their spending power. Location intelligence is an integral part of site selection, target marketing, and expansion planning, enabling businesses to collect and compile big data, then analyze it, filter it, and visualize the results, either at a broad or granular level to uncover trends and expansion opportunities. The right location intel can mean the difference between profit and loss. And in mature markets, location intel can optimize a chain of businesses to ensure value is always maximized.
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Ms. Nhan Liêu: +84-93451-1953
Mr. Leo Song (송준우) : +82-2-6000-8127
TAIWAN & CHINA
Ms. Camille Chen: +886-2-2749-34681 | +86-13910485231
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