A lot of home appliance centers have shut down because of the sharp fall of the market demand. Meanwhile, many new investors still have joined the market, because they believe that it’s now the golden opportunity to start up business.
The market demand depressing
Commenting about the business performance in the first six months of 2012, Nghiem Xuan Thang, Managing Director of Tran Anh Digital World Company, said the purchasing power has decreased continuously since mid 2011.
As for Tran Anh distribution chain, the sales in the first half of the year increased only by 6.3 percent in comparison with the same period of 2011. The growth rate is considered modest for such a big distribution chain, which has opened a new supermarket in Long Bien district in Hanoi.
Meanwhile, the pretax profit of the distributor has also decreased due to the higher sale costs the distributor has to bear when opening new retail points.
Other big distributors such as Pico, Media Mart, Top Care, Viet Long, Nguyen Kim and Best Carings have all complained about the decreases in sales, saying that the business has become worst than ever.
An executive of Pico said the demand for home appliance products has dropped by 50-70 percent from late 2011. Some home appliance centers in Hanoi can earn 100 million dong in turnover every day, while they previously got tens of billions of dong a week.
In general, distributors have to pay 15-20 percent more money to cover the increasing expenses. Meanwhile, since the weak is demand, they have to continuously run sale promotion campaigns, offering the price discounts of up to 50 percent.
Best Carings in Phu My Hung new urban area in district 7 of HCM City shut down in early 2012. Media Mart then closed the retail shop on Nguyen Chi Thanh Street in Hanoi. At Pico Mall at No 229 of Tay Son street, a lot of stalls have been left unoccupied. Other home appliance centers in Hanoi, Can Tho have also been simply dragging out their miserable existence.
Still rushing to open new supermarkets
Admitting that the home appliance market would prosper no sooner than by the end of 2013, but a lot of investors still have decided to open more retail shops at this moment.
Media Mart has opened the fifth supermarket at No. 3 of Nguyen Van Linh Street. Top Care has also opened its third supermarket in at Melinh Plaza in Ha Dong district, and LG Brand Shop on Lang Ha Street.
Tran Anh has revealed the plan to inaugurate a new supermarket on Dai Co Viet street which covers an area of 2500 square meters. It also plans to open one more retail shop in Thanh Xuan district by the end of the year.
Pico has been marching towards the southern market with the opening of a 55,000 square meter shopping mall which includes a home appliance supermarket on Cong Hoa Street, the main street in Tan Binh district.
Nguyen Kim has also announced two home appliance centers would be opened by the end of the year, one in Hanoi and the other in Hai Phong City.
Ngo Thanh Dat, Marketing Director of Tran Anh distribution chain, said that one would be able to save money if setting up retail shops right now, when the business premises rentals are low.
In the past, one would have to pay 30 dollars per square meter a month, while he now can lease the premises now at less than 20 dollars.
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