Electronics firms face stiff competition

Thursday, Feb 12, 2015 07:33

A customer shops at the Pico electronics market in Ha Noi's Thanh Xuan District. The electronics retail market in Viet Nam is seeing fierce competition. — VNA/VNS Photo Quang Quyet

HA NOI (Biz Hub) — The recent closure of a number of Topcare stores following a series of big-name shutdowns, was evidence of the fierce competition in the electronics retail market in Viet Nam.

Before Topcare, the electronics market witnessed the withdrawal of Wonder Buy in 2011, Best Caring in 2012, HomeOne in 2013, and Viet Long in 2014.

"A lot of enterprises are forced to shut up shop due to economic difficulties these days. However, the electronics market poses more risks with very fierce competition," said chairman of Ha Noi Supermarket Association, Vu Vinh Phu.

For example, new models of cell phones are released regularly, often within several months of each other. So stores that have large stocks of a single model have the potential to incur high losses, Phu said.

He emphasised that as many enterprises have to take loans from banks. Those that borrow large sums are often unable to repay the debts on time, which results in them going bankrupt or closing down.

On some streets in Ha Noi, such as Cau Giay, Nguyen Trai, and Giang Vo, many electronics markets are located near each other. Stores such as Nguyen Kim, Media Mart, Tran Anh and Pico are located on Nguyen Trai Street, each within one kilometre from the others.

"How can an electronic store survive on a street with some three rival shops?" Phu asked, expressing his concerns.

Chain expansion

Meantime, sellers also have to attempt to survive and attract customers, along with improving their competitive capacity.

Tran Anh Digital World JSC planned to expand to provinces and cities in northern Viet Nam. Of the 16 stores run by the retail chain, there are nine in Ha Noi and six in other northern provinces; a new store is going to be opened in Bac Giang Province.

With support from Japan's Nojima Corporation, which has over a 10 per cent stake in Tran Anh Digital World JSC, the electronics goods retailer is expediting investment, despite its post-tax revenues decreasing in the last two years.

The company recently added household appliances to its list of products and plans to invest in retail stores selling watches, as well.

Other electronics retailers like Media Mart, Nguyen Kim, Pico and HC also opened new outlets.

Additionally, a new electronics retailer is set to venture into the field. VinPro Trading and Services Company Ltd will open four electronics stores in HCM City and Ha Noi next month. The company also plans to set up some 20 stores in other cities and provinces nationwide this year.

The sector witnessed another newcomer at the beginning of the year — Thailand's Power Buy acquired a 49 per cent stake in NTK New Solution and Technology Development Investment Joint Stock Co, which owns Nguyen Kim, a major Vietnamese electronics mall.

Nguyen Kim is looking to expand from its current chain of 21 stores to more than 50 across the nation by 2019, in a bid to retain its market leadership. Under this plan, digital marketing will play a key role, with the company hoping to increase online sales by 50 per cent in 2015.

Low sales

To attract buyers to shop before the Tet (Lunar New Year) holiday, many electronics stores have begun promotional campaigns to increase sales. However, despite these efforts, the public's purchasing power continues to appear weak.

"Though sales are higher than normal, they remain lower than during the same period last year. Last year at this time we were much busier," said a seller at Pico electronics store on Nguyen Trai street, Thanh Xuan District in Ha Noi.

The store has launched many promotions, lasting for about two weeks before Tet which falls on February 19. Many electronics products, such as televisions, washing machines and household products were discounted, and gifts were also offered as incentives to customers.

Still, managers at many electronics stores remain optimistic. They noted that consumption often surges in the final week before Tet, since people will not be working and have more time to shop.

"Promotional programmes are very tempting, but I have to spend on basic goods for Tet, such as food and confectioneries first. I spend money buying electronic products when I receive my year-end bonus; I intend to buy a new television," said a customer. — VNS

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