VnnNews – Aware that supermarket sales have been growing by 30-40 percent annually, many firms dream of selling their products in the big stores.
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Nguyen, the owner of a cosmetics company, has approached a certain supermarket six times, but still can’t get her foot in the door.
“I showed them all necessary documents. I strongly believe that my products can compete well with similar products now available at the supermarket. However, I still cannot get shelf space,” she said.
The director of a confectionary company sighed. “It is so difficult to get through the supermarket’s door. They limit the volume of products we can display.”
“However,” he continued, “my biggest worry is that we will not be able to sell very much, because the pricing scheme of the supermarket makes my sweet cakes cost nearly 1000 dong per box more than my rivals.’ Meanwhile, at ordinary stores, my products are always cheaper than theirs.’
Supermarkets typically mark up prices 25-30 percent above the cost of the goods. That explains why only the products which are highly profitable or which sell in big quantities can find shelf space at supermarkets.
Speaking from a store owner’s perspective, supermarket executive Nguyen Thi Hai said some kinds of products are ideal for supermarkets, while others are not not advisable. Manufacturers need to determine where their goods will do best.
For example, consumer products like sugar, dairy products, processed food, cosmetics and bottled drinks sell well at supermarkets. Conversely, upscale clothes with well-known brand names and high selling prices should not be offered at supermarkets, Hai continued, because sales will be slow, making the products seem out of date and degrading the brand image. As for processed food, most supermarkets have enduring relationships with certain big partners, which means few opportunities for new producers.
Seasonal products like lanterns for mid-autumn festival should not be sold at supermarkets either, Hai believes. In fact, consumers do not think of going to a supermarket to purchase such a product.
Hai said that the best customers of supermarkets now are officials, office workers and students, people who do not want to waste time negotiating about prices or those who fear that they may get low quality or counterfeit products from traditional ‘market shops.’
What’s the right retailing channel?
Da Gia Co. sells clothing under the well-known Youth Fashion brand name. The company’s owner, Dao Van Dung, says it is too difficult to sell his products in supermarkets.
“You will have to offer your products to them many times and then you have to wait for approval and sell goods on consignment. Small companies don’t have the financial resources to do all those things,” he said.
Dung decided to offer his products at traditional markets and children’s clothes shops. He has been happy because distribution and sale of his products has been going smoothly.
“Retailers make payment right after they take goods for sale, and they give me timely feedback about my products,” he said
The distributor of
Le Van Loc, a deputy director of Nutifood, says the modern distribution channel (supermarkets, convenience stores and trade centres) has a 25 percent retail market share, while traditional markets, groceries and streetfront stores hold the rest.
According to the Ministry of Industry and Trade, though their number has grown rapidly in recent years, there are still only 1000 convenience stores and 250 supermarkets and trade centres nationwide. These are really ‘modest’ figures relative to the 9000 traditional markets and 250,000 retail sales points.
In fact, the supermarket is not such a perfect distribution channel. Even companies with good positions on supermarket shelves confess that sales via supermarkets contribute but modestly to their total revenues. The figure is 2.5 percent of sales for Tan Hiep Phat soft drinks, three percent for My Hao cosmetics and five percent for Kim Hang aluminum kitchenware, according to the companies.
Though supermarkets stock a wide range of products to serve all classes of customer, their target shopper has a household income of several million dong a month. Ten percent of the products available are cheaply priced, aimed at those who have a modest income of 1.5 million dong. Sixty percent of products are ‘middle class,’ targeted on household incomes of two to five million dong. Thirty percent of the goods on offer are expected to sell to higher income earners — five million dong a month and up. The mix of goods could vary a bit at different supermarkets. For example, the supermarkets in |
VietNamNet/SGTT
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