700,000 grocery stores still grow slowly compared to online channels

In the July working program, the Leading Business Club (LBC) under the Association of High-Quality Vietnamese Goods Enterprises organized a discussion with the topic "Digital transformation roadmap towards the market".

According to retailers, market research data shows that for some businesses, e-commerce contributes 30% of total revenue. This shows that many large businesses have invested resources to develop this potential sales channel.

2025 economic scale

Vietnam's digital economy is expected to reach 32 billion USD. Of which, the proportion of e-commerce contributing to the digital economy is 65% and currently the e-commerce channel is growing 37%/year.

With such a large growth rate, e-commerce contributes 7.5% to growth in all sales channels in Vietnam.

High discounts lead to selling costs in supermarkets being twice as high as in traditional channels.

Mr. Pham Hong Son, an expert on e-commerce and digital transformation of distribution systems, said that in Vietnam there are three distribution channels for fast-moving consumer goods including grocery stores-markets, supermarkets-convenience stores and online channels.

Of which, the traditional channel with 700,000 grocery stores, in the past 20 years, the growth rate is still only about 5%. The supermarket channel alone accounts for 20% of the market share, growing by 10%.

It is noteworthy that online channels in Vietnam, although only accounting for 5% of the market share, grow at 30% - 45% per year.

According to Mr. Son, although growth is low, grocery store owners are increasingly dynamic, embracing the 4.0 technology trend. Accordingly, they are gradually transforming into models such as supermarkets and convenience stores.

Meanwhile, supermarkets and convenience stores sell wholesale to traditional stores.

“The excessive dynamism of sales channels also causes trouble in the market. However, it shows that traditional channels continue to maintain their position,” said Mr. Son.

According to Mr. Son, in the context of digital transformation being promoted, how to digitize distribution channels to effectively reach end consumers requires businesses to clearly identify where their sales channels are, which distribution stages to digitize, and which discount level is the most reasonable.

For example, in the past, to bring goods into supermarkets, businesses accepted a discount of 20% - 30% depending on the product line, and every year retailers continuously requested an increase.

However, following the trend of developing online channels, supermarkets also know that they are not the only ones. Therefore, in the negotiation process, businesses need to proactively ask retailers to make reasonable offers.

"We can easily see that if the discount is too high, the selling cost at the supermarket channel will be double that of the traditional channel," said Mr. Son.

Mr. Son added that, regarding promotions, businesses are currently investing a lot but market demand is not increasing. Goods compete with each other, products without promotions are pushed into hidden locations, unsold. This creates distortion in the market, leading to the consequence of goods being pushed out of distributors, becoming "left hand hitting right hand, right hand hitting left hand".

At that time, the grocery store owner will not be able to sell the goods and will quit the business, and the sales staff will also suffer. Therefore, it requires businesses to manage distribution channels well and have an overall vision.

“At the same time, in the three factors of investment for grocery store owners, investment for modern channels, investment for e-commerce platforms and investment for promotions, I think that manufacturing enterprises should increase investment for traditional channels and grocery store owners so that they can compete and develop because currently the cost for grocery store owners is only 6% - 10%” - Mr. Son shared.

Ho Chi Minh City Law Newspaper

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