'Long-term price wars are lose-lose'

According to the Ministry of Industry and Trade, the Vietnamese retail industry has a market size of about 142 billion USD and will more than double by 2025, estimated at 350 billion USD. With a high growth rate of 1.5 - 2 times higher than GDP each year, retail is always an attractive industry and even in difficult times there are still opportunities for "players" with vision who want to seek market share. However, during and after the Covid-19 pandemic, the economy in general was heavily affected, forcing people to tighten their spending, which has somewhat affected the entire industry.

Since the beginning of 2023, the gloomy picture of the retail market for mobile devices, electronics, and household appliances has most clearly reflected the impact on people's spending habits. In order to stimulate consumer demand, in the first 6 months of the year, a series of technology dealer systems and distributors have continuously launched incentive and discount campaigns, leading to a widespread "price war". The strategy of competing on every penny initially benefits consumers, but in the long term will harm the entire market.

Mr. Ngo Quoc Bao, Senior Director of Enterprise Clients and Customer Experience, FPT Retail

According to Mr. Ngo Quoc Bao, Senior Director of Enterprise Customer and Customer Experience at FPT Retail, the long-term price war will be a Lose - Lose game for all participants. FPT Retail leaders believe that "price" is a very important factor in business. Users always want to buy products at good prices, but for sellers, the deeper the discount, the more it will "eat" into profits - the source of funds for investment, reinvestment in services before, during and after sales.

"When investments are affected, consumers will suffer in the long term. A second damage that few people think about: suppose a business successfully eliminates its competitors, it will lead to a monopoly, and consumers will suffer. When consumers are affected, the company will not make a profit, and investors will also suffer," Mr. Ngo Quoc Bao analyzed.

Retailers compete to lower prices, making the market unstable. This factor will make foreign investors hesitant to invest even though retail is one of the two most attractive industries in Vietnam in their eyes, along with the financial sector. This has a major consequence that the entire market and community are hurt. "We have a flexible pricing policy to compete, bringing value to consumers, but in the long run, we pursue improving the user experience. For example, during the recent difficult period, the company continued to invest in customer service," said the leader of FPT Retail.

FPT Retail still increased 700 employees while many other businesses had to streamline their staff to save operating costs.

The "bloodbath" between business units only to show which side is the cheapest is considered to distort the whole market. Fortunately, when the market has recently shown signs of warming up and gradually stabilizing, the price war has also cooled down somewhat. However, this may only be temporary if market participants do not change their operating strategies to aim for long-term sustainability but only focus on "clearing inventory and recovering capital" through low-price programs.

To avoid getting into a lose-lose game, Mr. Ngo Quoc Bao believes that it is necessary to operate in a way that ensures the harmony of interests of all parties, from investors, suppliers, manufacturers, landlords, employees to customers and the community. Taking his own business as an example, the director said that FPT Retail in general and the FPT Long Chau pharmacy chain in particular have differences for development. Specifically, the company never advocates taking advantage of its large scale to squeeze prices from suppliers or landlords.

"I once read a saying that all expenses are expenses. Only expenses for employees are not expenses. I support that view," Mr. Bao shared. With that motto, FPT Retail still increased its staff by 700 while many other businesses had to streamline their staff to save operating costs.

With the same industry units in the market, with the viewpoint of "buying with friends, selling with partners", the company determines the direction of healthy competition, self-development to bring benefits to consumers and all parties.

Source link: https://thanhnien.vn/fpt-retail-cuoc-chien-gia-ve-dai-han-la-cung-nhau-thua-185230812234724083.htm