As first blush, the arrival of transnational retailers in the metropolitan centres of Vietnam appears to be a boon for consumers who want wider choices and a death sentence for local retailers, most of whom are small.
These local smallholders suddenly find themselves facing foreign rivals wielding a daunting array of advantages including – substantial financial resources, advanced technology, superior products, powerful brands, and professional staffs with seasoned marketing and management skills.
Most of these small business owners think they cannot compete with their larger foreign rivals and are left calling on the government to reinstate trade barriers or provide some other form of support.
Still others seek strategic alliances with the so-called ‘big and mighty’ transnationals, while a significant number of local companies just throw in the towel and shutter their doors.
But experts advise that small retailers by the tens of thousands around the globe have managed to develop winning strategies to successfully defend their home turf against the same brand name transnational retailers the likes of Lotte, AEON, MM Mega Market and Big C that are gaining market entry into Vietnam.
Defending with the Home Field Advantage
The key to success say the owners of these small but successful companies is to concentrate on the advantages they enjoy in their home market.
In the face of aggressive and well-endowed foreign competitors, they with near unanimity suggest to local retailers that they will do better by focusing on consumers who appreciate the local touch and ignoring those who favour global brands.
Give effect to a strategy that concentrates on the large group of consumers who remain loyal to traditional products and stock the store shelves with brands positioned around beliefs in long-standing Vietnamese ingredients.
Recognize the importance of Online Sales
Recognize that the internet continues to attain more and more users with each passing month and online sales is growing faster than any other retail sector in Vietnam, say the experts. Local retailers should expect this trend to continue and recognize that their business needs to be part of it.
The internet is growing very fast in Vietnam, says Vu Xuan Truong from the Institute for Brand and Competitiveness strategy. Nearly 50 million Vietnamese use the internet frequently to make purchases and internet sales are on a steep upward trajectory.
With more than 60% of today’s youth shopping online and that percentage expected to grow at an astronomically fast rate, local retailers in Vietnam cannot afford to underestimate the importance of selling online.
Truong says that 2017 should be the year that all local retailers throughout the country set up shop online and discover how to drive online domestic sales and access new export markets via social media, search engine optimization and ecommerce.
Local retailers need to understand that the internet is the biggest supermarket in the country (and the globe). If they want to compete in retail with the large transnational retailers making market entry into Vietnam— they must be online.
Truong adds that if they are not online, they simply cannot win in retail in Vietnam or anywhere around the globe.
Though selling products online may seem a little daunting at first, a beautifully designed and developed website is indispensable for all local retailers in Vietnam, says Le Doan Hop, president of the Digital Communications Society.
Local retailers must learn to master web technology to help their businesses increase sales utilizing an effective ecommerce online sales strategy if they are to successfully compete with the large transnational retail giants in this digital age, Hop concludes.
