VietNamNet Bridge - Nearly 200 home appliance shops opened in 2015 as retailers expanded their business at ‘lightening speed’. However, the home appliance market posed challenges and many of them had to leave the market.

 

In early 2015, the business circle, for example, witnessed the death of TopCare, a strong brand. The distribution chain suddenly left the market during Tet, the peak sales season.

However, while TopCare closed, many other retailers eagerly entered the market. 

Vingroup, a big company in the real estate sector, jumped on the bandwagon with two brands, Vinpro and Vinpro+. 

And The Gioi Di Dong, well known as a mobile phone distributor, made heavy investments in Xanh, a home appliance supermarket chain brand, while The Gioi So Tran Anh poured money into hypermarkets.

The race to expand their networks resulted in the opening of many new home appliance supermarkets. 

Nearly 200 home appliance shops opened in 2015 as retailers expanded their business at ‘lightening speed’.

VinPro and VinPro+ in the first nine months of the year alone put 100 shops in 30 provinces into operation. Xanh in 2015 opened 70 shops, while Tran Anh opened nine hypermarkets in the north.

They had good reasons to expand. Official reports showed that the home appliance market in 2015 witnessed high growth rates of 20-30 percent with sales of VND120 trillion. 

Mobile phones saw the highest growth rate with 30 percent, while laptops, tablets, electronics and refrigeration products had a 20 percent growth rate. 

Vietnam is listed among the top five home appliance markets in the world with the highest growth rates.

However, while most retailers had huge turnover, VND1.5 trillion and higher, their profits were modest.

Analysts said the profitability rate of the home appliance distribution sector was 3 percent. But only a few distributors could obtain such a rate.

The Gioi Di Dong was the only one distributor with satisfactory business results among those which made their financial reports public.

The Gioi So Tran Anh’s financial report showed that in the first nine months of 2015, its total revenue was VND2.474 trillion and post-tax profit VND11.9 billion. 

The chain estimates revenue of VND4 trillion for 2015 and modest profit of VND15 billion. This means a profitability rate of 0.3 percent, which is much lower than the bank deposit interest rate.

However, despite modest profits, analysts say distributors continue to open more and more shops as they see the great potential of the market, which is expected to have turnover of $800 million from 2016.

Tran Thuy