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19 – 21 April 2018

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16-08-2016
[VIETNAM] AEON Sees Vietnam as a Growth Driver

Growing hand in hand with Vietnam's beauty industry for the past 10 years, Cosmobeauté Vietnam is now celebrating its excellent 10th year in 2017, reaffirming its esteem presence as the largest beauty trade exhibition in the fast growing market in all aspects of beauty industry, Vietnam.

Cosmobeauté Vietnam is full of confidence towards the market as it sees Vietnam as an emerging market with huge potential that has been experiencing impressive growth throughout the years, just like how Aeon sees the growth in the market of Vietnam.

Japanese retailer Aeon which was created in 2013, is expanding overseas especially in Southeast Asia. Aeon specifically sees Vietnam as a growth driver in the Association of Southeast Asian Nations. It has opened its fourth outlet in Ho Chi Minh City, Vietnam in 2014 and the amount of visitors during the first day was spectacular.

The Nikkei had conducted an interview with Nagahisa Oyama, the head of Aeon’s Vietnam unit, about Aeon’s strategy in the country.

Nagahisa Oyama

Aeon opened its first Vietnamese shopping mall in Ho Chi Minh City in January 2014. How is business?

The first outlet couldn't be better. Its performance is almost too good to be true. We followed it up with a second outlet on the outskirts of the city, and we were just a little concerned about it, initially, but its performance is now nearly as we had expected. We get offers to open new outlets in locations like Danang, which is a medium-size city in central Vietnam, but we think it's too soon. For now, we'll go ahead with our plan to concentrate our openings in Ho Chi Minh City and Hanoi.

We had more than 180,000 visitors to our fourth store on the first Sunday after it opened [in July]. There are a million residents within 15 minutes of the store. We think we'll be able to open 10 outlets each around Ho Chi Minh City and Hanoi, for a total 20 outlets, at least for the time being.

Your company last year acquired stakes in local grocery store chains Dong Hung (Citimart) and First Vietnam (Fivimart). How have these tie-ups worked out?

Vietnam's grocery store market is worth several hundred billion yen (several billion dollars) at present, but we expect it to grow to about 5 trillion yen. The combined sales of Citimart and Fivimart is about 12 billion yen, which isn't that big. But their sales have shown double-digit growth on a same-store basis after they teamed up with us. They have introduced Japanese merchandise and renovated their outlets. Sales at the biggest grocery store chain in Vietnam are still only about 100 billion yen.

Vietnamese people shop every day. Our know-how in precooked foods and logistics system for fresh foods developed in Japan are useful. Vietnamese also have stronger faith in the quality of Japanese products, compared with other ASEAN countries, which is a positive factor for us. We hope to establish an optimum outlet model soon and expedite future openings.

Do you think your Vietnamese business has successfully grasped local needs?

There were shopping centers that deal mainly in luxury-brand products in city centers before Aeon set up shop in Vietnam. But those specifically target wealthy customers. Aeon will remain in our range. We target the middle class and the medium-income bracket, and offer products and floor space to safe, reassuring products. Some people initially said opening outlets on the outskirts of the city was risky, but we now feel we will be supported by ordinary middle-class consumers and households with kids. Because of our positioning, we need to be careful to monitor and maintain our pricing. For example, right after we opened the first Vietnamese outlet, we received a lot of complaints that our prices were too high, especially for clothes. So we adjusted the pricing.

Vietnamese [typically] spend about 150 yen for lunch. So you need to ask, are they willing pay three times as much for a lunch at a restaurant in our shopping mall? What about twice as much? To correctly assess local needs, tie-ups with local companies are useful.

Aeon has developed private-label products specifically for the ASEAN market, and these are supplied within the region. How is this policy working out?

We have developed private-label products in Malaysia and Thailand only, but we plan to set up a specialized company in Vietnam in July, so that will have three private-label development centers in ASEAN. Different country operations have different specialties, such as halal products in Malaysia, and we want to carefully plan our products and sell them not only in their country of origin but elsewhere.

The investment of Aeon in Vietnam market will definitely help in growing the economic, and it will indirectly grow the market of beauty industry in Vietnam. In conjunction with Cosmobeauté Vietnam 10th anniversary, we will have a lot more exciting events for the industry players.

Be part of the market leader now, you do not want to miss out the chance in taking part in the largest beauty trade exhibition at this highly potential market. There are now hot rebooking happening with our existing exhibitors, join us now and book your booth as it is selling like hot cake now!

Interviewed by Masayuki Nakagawa
Original Article: http://asia.nikkei.com/Business/Companies/Aeon-aims-for-the-middle-in-Vietnam-says-localhead?page=1
Publication: Nikkei

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