Casino Group to exit Vietnam

French hypermarket operator Casino Group is to exit Vietnam, following the footsteps of German rival Metro.

Casino operates the Big C hypermarket chain in Vietnam and Thailand – but despite Vietnam’s 90 million population, the company is achieving as little as a fifth of its Thai turnover.

Big C opened its first Vietnam store in 1998 and has 30 stores in cities across the country.

Confirming the planned divestment to Bloomberg, a Casino Group spokesman said the company hopes to be paid US$813 million for the Vietnam operation, money which would be spent paying down debt and allowing it to focus on further Thai expansion, and its core European operations.

There is no confirmation of who is bidding for the business, although Deal Street Asia is reporting local intelligence that fast-growing retail and shopping centre powerhouse Vin group is in negotiations.

Other buyers could include Thailand’s Berli Jucker group, which has been trying to acquire the Metro business to bolt on to its growing Vietnamese Be Smart convenience store network.  Korea’s Lotte group, arguably Big C’s largest competitor, may also be in the running to give additional critical mass to its hypermarket network, especially in small city locations.

Not wanting to diminish interest in the Big C Vietnam business, the French company has revealed little about its operations there publicly. Turnover is reportedly about 312 million euros, or US$340 million. That’s about $11 million a store annually, or just $217,000 per store per week – a meagre figure for a global retailer operating hypermarkets.

But tellingly, it observed: “Casino Group will continue to focus on its growth strategy in its key markets in France, Latam and Asia around buoyant assets.”

“Buoyant assets” – of which by inference Vietnam is not – perhaps reflects the cruel nature of the Vietnamese market where many international retail brands have ventured in recent years and failed to turn a profit. As one long-term expat observed to Inside Retail Asia within the last week: “People don’t seem to understand that of the 90 million people in Vietnam, 88 million do not have any money. The growing middle class in Ho Chi Minh City and Hanoi are offset by people like coffee farmers in the country who live pretty much on a subsistence income.”

In Thailand, Big C plans to open six hypermarkets next year along with 75 Mini Big C format stores. It will raise cash by selling down its real estate portfolio on lease-back deals.

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