Analyzing Vietnam's Retail Sector

563 WordsFeb 2, 20182 Pages
Vietnam’s retail sector is currently alike to Thailand’s around 10-15 years ago, in terms of regulations and consumption behavior. Given that the regulatory environment has yet to be liberalized in Vietnam, BJC has formed joint-ventures (JVs) with local partners and expanded its distribution network aggressively ahead of anticipated market liberalization in 2016 - after the AEC comes into place. Currently, both Thai-An and Thai Corp have a combined distribution network of around 130,000 outlets nationwide, with total sales contributions of around THB3.0bn. BJC expects this distribution network to reach 230,000 outlets, with sales value of around THB9.0bn in 2016, implying compound annual growth rate of around 28%. BJC targets its consumer supply chain to grow in tandem with the expansion of its CVS chain, which it intends to expand under the B’Smart brand. B’Smart is currently running at 2,500 stock keeping units (sku) per store. Under a 3-year plan, the number of stores will expand to 150 stores in FY14, and 300 stores in FY15, servicing around 3,500 stock-keeping unit (SKU) per store. Risk And Opportunity In Vietnam Tough time in Vietnam In our view, although the consumer product penetration in Vietnam remains low, it is not an easy market to operate in and there are a lot of challenges going forward. Currently, the consumer business is facing heavy pressure from the country’s economic slowdown, which has seen rising high inflation of around 7-7.5% in 1H13, high interest

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