Between traditional and modern distribution channels

 

Vu Quoc Chinh, a market expect of the Center of Business Studies and Assistance (BSA) said that the total annual spending of five provinces in the southeastern region, including Binh Duong, Tay Ninh, Dong Nai, Ba Ria-Vung Tau and Binh Phuoc, is estimated at more than VND118.97bln. This figure shows that this is a potential market for enterprises manufacturing various commodities. 

Customers buying goods at a domestic supermarket

 

Regarding distribution system, commodities in the southeastern region are distributed via the two main channels: traditional markets and supermarkets or plazas. The whole region is now home to more than 500 traditional markets and tens of supermarkets and plazas.

 

Although there are a lot of traditional markets, but they are unprofessional and uncivilized. Meanwhile, customers have high requirements for shopping and consumption. The two types of the traditional and modern distribution are now under severe competition.

 

In Binh Duong alone, there are now 86 markets, including 56 in the urban region and 30 in the rural region, with a total of 9,837 stores and 975 kiosks; and 28 supermarkets and plazas providing a wide range of commodities, mostly in TDM, Thuan An, Di An towns and Ben Cat district. Of course, goods distribution activities herein have the same form like other localities in the southeastern region.

 

Between domestic and foreign enterprises

 

According to a representative of Dong Nai province, supermarkets and plazas now outdo traditional markets. Noticeably, most of them have been invested by foreign enterprises.

 

In recent years, supermarkets and plazas invested by domestic enterprises have loomed large, but they have only accounted 30% of market share of the modern distribution channel. Hapro Mart, Saigon Co.op, Fivimart, Citimart…are typical domestic supermarkets and plazas, mostly in HCM city and Ha Noi.

 

There is now a severe competition between domestic enterprises and foreign retail groups with the well-known brand names like Metro, Big C, Parkson, Lotte, Louis, Vuiton…

 

The strong points of the foreign retail groups are great financial ability; abundant supplies of goods; professional marketing, advertising skills and business plans…Hence, domestic enterprises will face obstacles when competing with the groups in the domestic market.

 

Le Van Tri, Deputy General Director of the Southern Rubber Industry Joint Stock Company (Casumina) said that domestic enterprises need to make coherence and manage to boost the domestic market. Functional agencies also need to get involved in actions so that customers know more about domestic enterprises and support them.

 

In the current difficult economic context, Casumina has also learnt to promote its development. Particularly, Casumina started construction of the full-steel radian automobile tire factory in Binh Duong province’s Tan Uyen district with the annual capacity of 1mln automobile tires. Once completed, the VND3.5trillion factory will generate jobs for around 700 laborers…

 

Reported by Trung Dong-Translated by K.T