Back then, the company boasted an active customer base of 12 million Vietnamese and a daily footfall of 175,000 customers across its multiple banners and formats.
The cornerstone of the company’s success in Vietnam is the Big C network of supermarkets and hypermarkets it bought from France’s Casino Group in 2016, for an enterprise value of $1.14 billion. In the four years since, the Thai company has progressively transformed the network into a much more modern and lively business and recently spun off a new banner called Go!, with distinctive red-and-white branding. Many of the Big Cs are being rebranded under the Go! livery. As at June last year, Central operated 35 Big C- or Go!-anchored malls, 25 local Lanchi Mart-bannered supermarkets, and 170 speciality stores across 39 provinces, its total footprint exceeding 1.08 million sqm.
The speciality stores include the local electronic appliance retailer Nguyen Kim, which it first invested in before taking over completely and rejuvenating under a modern new brand identity. It has also built a small network of Supersports stores, selling sports shoes and athletic wear.
When Thailand trounces Europe
What makes Central Retail’s success so remarkable is that the company had relatively little international experience before landing in Vietnam — and in the eight years since it has seen off major multinationals including Casino, Germany’s Metro AG and France’s Auchan. While growth-hungry businesses of all manner of size and scale have been attracted to Vietnam by its youthful population and fast rate of GDP growth, many have proved unsuccessful.
Generally speaking, Asian-headquartered multinationals have proven the most adept at understanding the market: Samsung, for example, was singularly responsible for US$600 million of exports from Vietnam in 2019, equivalent to a staggering 25 per cent of the country’s total export receipts.
Perhaps Central Retail is trailblazing while others are heading home chastened for their arrogance because Central understands the complexities of developing markets. It is familiar with the quirks of doing business in a maturing commercial environment. It understands the people it is serving because Vietnamese are culturally closer to Thais than to Europeans.
There’s a hint of that approach in a recent statement by CEO Yol Phokasub: “We are constantly seeking expansion and will continue to invest in Vietnam because we foresee how much potential this country has. The core value of Central Retail Vietnam’s business operations is the collaboration from all stakeholders,” he said.
“To continuously move forward, we are not only a catalyst that helps drive economic growth, but we also create sustainable growth for Vietnamese society. This captures our determination to become the Central of Life for all Vietnamese people,” he continued. “We strongly believe that the strength of Central Retail and service platform combined with our diverse and resilient portfolio in foreign countries will enable us to expand significantly and continuously grow in the long run.”
Blending old ways and new
Central Retail was founded back in 1947 and in that time has witnessed massive change in Thai society, not to mention technology, with the development of modern retailing and now the essential reality of omnichannel. It has arguably used much of that experience to modernise Vietnam’s retail sector, which just a decade ago sported very few malls or convenience stores; family-owned businesses and wet markets were the retailers Vietnamese most-often visited.
As it has built a network of sophisticated modern-day stores, with multichannel touchpoints and back-end systems covering merchandising and logistics, Central has not overlooked the local people’s traditional shopping ways. The company says it places high importance on sustainable development of the economy, community and society through corporate social responsibility activities such as committing to local sourcing, weekend farmers’ markets, and an SME support program where retail spaces in Big C grocery stores are provided to local enterprises, a business model based on the success of Jing Jai Market (Sincere Market) in Thailand.
While the advent of Covid-19 has impacted Central Retail in both of its core markets, its Vietnam prospects have barely been affected. In Vietnam, Covid-19 has forced the government to revise its GDP growth target down to between 2 and 2.5 per cent for the full year, but that still ranks it ahead of comparable Asean economies, including Thailand, where it is projected to contract by 8.5 per cent this year. During the last quarter of last year, GDP grew by about 4.5 per cent.
Central Retail may be nearing saturation point with its Thai network, but its success to date in Vietnam shows it has a lot more opportunity moving forwards.
This article was originally published in the February issue of Inside Retail Asia’s quarterly magazine.