Parkson in Vietnam is dogged by ill fortune

Parkson has announced the shutting down of Parkson Flemington in HCM City. To most Vietnamese, this was not a surprise. Three other Parkson shopping malls have closed. The last center in Hanoi was closed in 2016.

Parkson Holding Berhard reported total revenue of 4 billion RM, or VND23 trillion in 2017 and loss of 142 million RM, an increase of 40 percent over the year before. 

Vietnam continues to be one of the markets with the highest minus growth rates.

The SSSG (same store sales growth) rate of Parkson Vietnam was minus (-) 13.6 percent in the 2017 fiscal year which ended on June 30, 2017,  just below Myanmar and other remaining markets.

The total revenue from both Myanmar and Vietnam in 2017 was 101 million RM (VND600 billion), a decrease of 9 percent compared with the year before.

In the letter to shareholders, Tan Sri William H.J. Cheng, chair of Parkson Holdings, said the Vietnamese retail market is still in a saturation period which has caused difficulties for Parkson’s operations.

Parkson joined the Vietnamese market in 2005 and became one of the first retailers of branded goods in the country.

However, Parkson’s investments in Vietnam unexpectedly stopped in 2014, when it stopped opening shopping malls in the country. In the following years, it had to shut down some shopping centers in large cities, one after another, after seeing business prospects worsen.

After closing the last shopping center Parkson Viet Tower on Thai Ha street in Hanoi, the retailer explained the business environment in the north was weakening, with more and more retail premises left idle. 

Meanwhile, the southern market was still good and shopping centers in HCM City still maintained satisfactory business results.

However, with the announcement of the closure of Parkson Flemington in HCM City, concerns remain about the southern market. 

Leaving the Hanoi market, Parkson said the move was a step to implement its strategy to optimize business performance in Vietnam. However, its efforts have not brought positive results.

Vu Vinh Phu, a trade expert, said in Dat Viet that demand for the products Parkson is trading show no signs of increase. In Vietnam, high income earners, those with monthly income of VND12-15 million, only account for 15-20 percent of the population.

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Mai Thanh