Supermarkets are developing private brands

Minh Thao from Binh Dang residential quarter in district 8, HCM City, recently bought a 2 liter vegetable oil bottle with the ‘Co-opmart’ brand of Saigon Co-op, one of the largest supermarket chains in Vietnam. 

Thao said she had often bought vegetable oil products with Tuong An and Simply brands, but decided to try a Co-opmart oil because it was cheaper.

“With Co-opmart products, I can save VND20,000,” she said.

Looking at her trolley, reporters found that Thao had also chosen ‘Co-opmart’ brand facial tissue, floor cleaning liquid and cup washing liquid. 

Metro Cash & Carry (now MM Mega Market) first launched its private brands in the Vietnamese market 10 years ago.

According to market analysis firms, Saigon Co-op, the No 1 retailer in Vietnam, is leading the market in private brand development, but Lotte Mart is developing private brands most rapidly.

Meanwhile, MM Mega Market has been undergoing a restructure after changing hands and reduced the proportion of products with private brands. Big C has stopped developing private brands, except Ebon brand for cold food.

According to Doan Diep Binh from Lotte Mart Vietnam, the chain has developed private brands for more than one year and now has 1,000 products of different kinds. 

In 2017, Lotte Mart exported VND1 billion worth of products bearing its Choice L private brand, which were food, consumer goods and household use plastics.

Retailers all said that private brands have higher growth rates than the average growth rates at supermarkets. However, retailers are developing private brands to offer more choices to customers, thus improving business performance. But this hasn’t optimized profits.

According to Vo Hoang Anh from Saigon Co-op, in developed countries, modern retail channels have private brands. 

Meanwhile, in Vietnam, the channel only accounts for 10-15 percent of the retail market share. FMCG (fast moving consumer goods) account for 10 percent of the sales through the channel, but there are numerous suppliers.

“Manufacturers want to focus on developing their brands, but they don’t want to make products for supermarket private brands,” he said. 

In most cases, manufacturers believe that with private brands, supermarkets are trying to scramble for market share. Thus, it is difficult to find a common voice between manufacturers and retailers about the issue.

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Thanh Lich