French company Groupe Auchan has stepped into Vietnam’s growing competitive retailing market through its arm AuchanSuper.
Adding to its three Simply Mart stores in Ho Chi Minh City, AuchanSuper will open 15 more, each with an area between 2,000 and 3,000 square metres. In the north, the retail giant has plans to open its first Simply Mart store in the Mipec Long Bien trade centre towards the end of 2016. By 2020, AuchanSuper aims to have 20 stores in the north.
According to Philippe Deladande, financial director for Groupe Auchan, the group’s total investment into Vietnam will be as high as €35-40 million ($38-44 million). To serve its expansion plan in Ho Chi Minh City and Hanoi, AuchanSuper is co-operating with two different partners. In the south of Vietnam, AuchanSuper has chosen RH Group as its local partner. This group has 20 years of experience in retail, and is responsible for developing the S.Mart supermarket chain since 2012. RH Group is part of C.T Group, which is well known in Ho Chi Minh City with 36 member companies in six fields of business: real estate, upscale retail, construction, finance, food-entertainment, healthcare and education, plantation, mining and ecotourism. Meanwhile in Hanoi, AuchanSuper’s partner is Mipec. Although Mipec does not have much experience in retail, it does own 50 major locations and has a slew of large real estate projects in the north, in addition to several other smaller locations. Together, AuchanSuper and Mipec will establish a specialised joint venture in retail.
Even though its chain is still relatively small, AuchanSuper’s entry into the market is expected to heat up the competition considerably. The group has had previous successes in the Asia-Pacific region through Sun Art Retail, a joint venture with Taiwan’s RT Mart. The success of this retail chain is rooted in the fact that it caters to local tastes. SunArt also has discount programmes that align with local customers.
After Casino Group’s Big C, Simply Mart is the second French supermarket chain to set foot in Vietnam. The telling difference between the two is that, while Casino is looking to sell the highly successful Big C in order to pay its debts, Auchan is completely unburdened by debt. In fact, as a company renowned for its solvency, many international financial institutions have courted it as a client. In 2014, the International Finance Corporation announced that it is considering a €250 million ($272.6 million) loan to AuchanSuper to help the latter expand over the next three years in emerging markets, including Vietnam.
AuchanSuper operates 774 hypermarkets and 817 supermarkets in 15 countries, with 302,000 employees. It is the fourth biggest retailer in France with 9.2 per cent market share, and tenth biggest globally in terms of revenue. The company operates in four fields that compliment one another: hypermarkets, supermarkets, commercial real estate, and consumer banking. It also owns several chain stores, including Decathlon (sports goods), Tapis Saint-Maclou Kiabi (clothes), Boulanger (home appliances), and Flunch and Pizza Pai restaurants.
According to German market research firm Statista, the size of Vietnam’s retail market is set to rise as high as $100 billion in 2016. Vietnam is considered a potentially lucrative market for modern retailing as consumers here are switching from traditional retail channels, such as wet markets, to supermarkets.