Grocery outlets modernize, intensifying their backing for producers

Grocery outlets modernize, intensifying their backing for producers

Bustling Grocery Stores Hold Their Ground Against Modern Retail

Amidst the rapid expansion of supermarket chains and e-commerce platforms, conventional grocery stores, especially in Ho Chi Minh City (HCM City), persist in the Vietnamese retail market, as trade experts confirm.

NielsenIQ reports reveal that traditional trade channels, including grocery stores and wet markets, account for 75-83% of total market sales. Over 1.4 million grocery stores nationwide contribute up to 65% of the fast-moving consumer goods (FMCG) market.

A survey by the Business Association of High Quality Goods found that over 70% of consumers opt for grocery stores due to affordable prices, convenience, and close relationships with sellers. As modern retail formats continue to expand, traditional trade channels, such as grocery stores, remain a significant distribution network for manufacturers.

Grocery store owner, Nguyen Tuan Ha, concurs, revealing the role of these stores for swift and convenient delivery of goods to consumers. Shopping at these stores is deeply ingrained in Vietnamese consumer culture, spanning urban centers to remote areas, according to Ha.

Evolving with Modern Trends

Proactive grocery stores have evolved, adapting to meet modern retail trends and even partnering with supermarket chains. No longer cluttered stalls, many traditional grocery stores have undergone transformations in appearance and services, boasting organized product displays with transparent pricing and origins.

Thu An, a grocery store owner near the wet market on Huyhn Van Bhai Street, in Phu Nhuan District, has upgraded her store over the past two years. She now offers a diverse range of essential consumer goods and understands her customers' shopping habits, providing them with a better service.

Competing against major retail chains like WinMart, GS25, and Bach Hoa Xanh, her store remains popular due to a loyal customer base. Some customers even delay payments on certain items, reflecting the trust between traditional grocery stores and their patrons.

An organic food shop in HCM City. Despite modern retail growth, grocery stores remain vital for manufacturers. Photo sabudo.vn

Blending the Old and the New

Grocery store owners in Taan Binh District, like Lan Hong, have embraced a modern approach while retaining traditional roots. Hong's store features an organized layout, separate sections for fresh and processed goods, and a loyal customer base.

To cater to evolving consumer preferences, Hong sources products directly from major suppliers, adapts her inventory according to customer demand, and fosters close relationships with shoppers by offering complimentary items and home delivery services.

Thanh Ha, a grocery store owner in District 12, has persisted in business for nearly two decades, overcoming various challenges like supply shortages during the COVID-19 pandemic. By joining the 'Good Price' project by MM Mega Market and receiving training on sales and customer service, Ha has built a strong reputation, attracting more customers and reinforcing trust in traditional grocery businesses.

Partnering with Manufacturers

Many businesses favor grocery stores as distribution partners due to higher profit margins compared to supermarkets, which impose additional fees and discounts. Nguyen Caoc Dung, a senior manager at NielsenIQ, shares this perspective, stating that grocery stores remain a substantial driver of sales for manufacturers.

Recognizing the competitive edge of grocery stores, modern retail brands are focusing increasingly on this sector. In addition to MM Mega Market's 'Good Price' project, which helps investors transform traditional grocery stores into modern retail models, major retailers like Saigon Co.op and Aeon are also developing modern grocery store formats to satisfy changing consumer needs.

The VinShop application from One Mount Group allows grocery store owners to order products at discounted prices.

A traditional convenience store in HCM City. Photo thesaigontimes.vn

In summary, traditional grocery stores persist in the Vietnamese retail market due to factors such as ubiquity, cultural and consumer behavior, shopping habits, and urbanization, combined with the convenience and personalized service they offer. Despite competition from supermarkets and e-commerce, these stores' practical advantages and longstanding relationships with customers sustain their competitiveness.[1][2][3]

1. Traditional grocery stores, despite the expansion of modern retail and e-commerce, continue to hold a significant position in the Vietnamese retail market due to their deep-rooted presence in Vietnamese consumer culture.
2. According to NielsenIQ reports, traditional trade channels like grocery stores account for 75-83% of total market sales and contribute up to 65% of the fast-moving consumer goods (FMCG) market.
3. A survey by the Business Association of High Quality Goods reveals that over 70% of consumers choose grocery stores for affordable prices, convenience, and close relationships with sellers.
4. Proactive grocery stores have evolved to adapt to modern retail trends, offering organized product displays, transparent pricing, and origins, and some have even partnered with supermarket chains.
5. Modern trends have led some grocery store owners to adopt a modern approach while maintaining traditional roots, fostering close relationships with customers by offering complimentary items and home delivery services.
6. Many businesses prefer partnering with grocery stores as distribution partners due to higher profit margins compared to supermarkets. Recognizing this, modern retail brands are focusing more on the grocery store sector.
7. The VinShop application from One Mount Group offers discounted prices for products to grocery store owners, further enhancing their competitiveness.
8. Despite challenges like supply shortages during the COVID-19 pandemic, some grocery store owners, like Thanh Ha in District 12, have persisted in business for nearly two decades by adapting to changing consumer needs and building a strong reputation.

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