VinMart, Masan and the "equation" of Vietnamese people using Vietnamese products in the first 9 months of the year

A 5-year-old retailer transfers its system to a consumer staples manufacturer with more than 20 years of experience. Both businesses, the transferor and the transferee, are the largest domestic businesses in the country. With that scale, this is a retail deal that can benefit consumers the most. That is a rare thing in the retail industry over the past 10 years. So what benefits do consumers get?

The boss is happy, the expert calls it a "strange thing"

Commenting on this transfer, many market and economic experts said that it was strange. Because normally, in the world, there are few consumer goods manufacturing enterprises that also “take on” the retail sector. Manufacturing and retail trade are always two completely different fields in terms of the nature of their activities. Therefore, enterprises should focus on one field to be able to develop best.

From those professional opinions and experiences, Masan's acquisition of VinCommerce (VinMart supermarket chain, VinMart+ stores) and VinEco Company could be a surprising choice, especially with the group's ambition to become a regional-scale manufacturer of essential consumer goods.

This makes sense, given the huge system, with more than 2,600 VinMart and VinMart + supermarkets and stores of VinCommerce in 50 provinces and cities, and the system of 14 high-tech farms from VinEco that Masan took over. This is currently the largest retail system of essential consumer goods in Vietnam, and is still growing.

The acquisition of a system of 2,600 supermarkets and stores immediately increased Masan's workforce by over 20,000 people. That is, Masan's workforce almost tripled after this merger. That is a real challenge.

In 2018, Vingroup 's retail revenue (mainly VinMart and VinMart + systems) reached VND21,257 billion. In the first 9 months of the year, this retail revenue reached VND23,571 billion. Meanwhile, in 2018, the entire Masan Group recorded more than VND38,188 billion in net revenue. If excluding revenue from unrelated industries such as mining, animal feed, etc., revenue from consumer goods and food of Masan is not much different from revenue from the newly acquired retail sector.

Thus, it would not be an exaggeration to say that with the acquisition of VinCommerce, Masan's scale has almost doubled. In other words, this acquisition is still a challenge for the group, besides the business opportunities.

So why are both Masan and Vingroup excited about this deal?

Real benefits

Basically, like every country in the world, Vietnam's retail system currently has 4 main channels. These are sales at supermarkets or shopping malls, sales at convenience stores, mini supermarkets, online sales by individuals, and sales through the e-commerce website of businesses.

In Vietnam, the supermarket and shopping mall system is a fierce competition between domestic and foreign enterprises, with foreign enterprises having the advantage. The same situation also occurs in the segment of sales via e-commerce websites.

Regarding sales structure, the entire supermarket system, shopping malls, online sales individuals and e-commerce websites of enterprises all focus on common consumer goods, electronics, technology, luxury goods, etc.

However, food and essential consumer goods are the strengths and are mainly sold in convenience stores and mini supermarkets, which are always built and operated right in concentrated residential areas. That is also the key product line of Masan, and of the entire VinMart & VinMart + system. In other words, there is a similarity in the structure of products produced by Masan with the products sold in the retail system that this enterprise has just acquired.

Masan is also a company that invests in R&D activities, has a modern factory to produce advanced products, guaranteed quality and especially suitable for the "taste" of the majority of consumers. Thanks to that, Masan is now the largest manufacturer in the country in the field of spices, food, especially fish sauce, soy sauce, accounting for about 70% of the national market. And is also on the way to becoming the largest manufacturer in the country of fast food such as instant noodles, pho, coffee... or in the food field with advanced products such as chilled meat.

While many experts and businesses focus on the factor of products and prices suitable for all customer groups to explain why Masan holds the largest market share in the field of spices, food, etc., not many people pay attention to the fact that the customer base consuming Masan products is always quite young. That is, the customer base always first chooses products that are available, convenient, easy to use, of guaranteed quality and associated with the brand of a large manufacturer, then pays attention to the price.

The young customer base is also similar to the customer system and business philosophy that VinCommerce built from the beginning for the VinMart and VinMart + systems. From that perspective, it is not difficult to see that, although Masan's products are being sold at more than 200,000 consumer points of sale nationwide, exploiting the VinMart and VinMart + systems is still a strategic step for Masan to reaffirm its position as high-quality Vietnamese goods in the trusted convenience store system.

It should be emphasized that the commitment to quality and using only trusted brands (not price) is the key reason why VinMart and VinMart + have gained a business advantage over traditional markets and stores. Of course, when taking over, Masan will certainly continue to maintain this philosophy. Or even perfect the strategy of turning VinMart and VinMart + into a "sanctuary" of high-quality Vietnamese goods.

That is not just a slogan for fun. In recent years, the slogan Vietnamese people prioritize using Vietnamese products has always been promoted, even organized into an action program. However, that program lacks criteria, standards, and especially lacks specific trusted brands. And therefore, Vietnamese people prioritize using Vietnamese products is always a call, rather than a program with specific economic efficiency.

This explains Masan's decision to take over the VinMart and VinMart + systems from Vingroup. As mentioned above, with 200,000 points of sale and a system of several dozen products, taking over VinMart + from Vingroup does not have much impact on Masan's traditional product revenue.

The biggest impact will come from the fact that this enterprise directly manages and contributes to supporting and supervising to improve the quality of Vietnamese goods sold in its system. That is a goal that benefits the enterprise and, above all, Vietnamese consumers.

Source: https://www.masangroup.com/vi/news/masan-news/masan-net-profit-up-90-2-per-cent-in-first-9-months-6.html