Lots of promotions but still deserted
At many large electronics chains in Hanoi and Ho Chi Minh City, the stores are deserted, although they used to be crowded and bustling with customers trying out household appliances. "At this time (in the evening), people rarely go shopping, but during the day it's more crowded," an employee at the Dien May Xanh chain explained. Other product display areas are also sparsely populated, mostly staff members of the unit.
The gloom contrasts with the bright colors of the promotional signs that fill the space. A series of TV models are discounted from several hundred thousand dong to 2 - 3 million dong, depending on the model and manufacturer. The supermarket staff revealed that these are not the final prices. "Depending on the model and time, the supermarket applies promotional programs with different discount rates. If you like the model, I will check the exact price for you," the female employee named MN advised.
The electronics market has been experiencing some "downfalls" recently.
Similarly, many electronics retail systems such as Nguyen Kim, MediaMart, Pico… also lack customers despite launching many promotional programs. After 9pm, Nguyen Kim supermarket on Nguyen Trai street (Ha Dong district, Hanoi) turned off the lights for most of the display equipment on the first floor, leaving only the lights on and displaying some models outside the door and the mobile device display area.
According to the male employee here, customers can refer to the samples and will be specifically advised about the accompanying programs, including discounts when buying online, percentage discounts when buying with other products... The common discount is over 10% and can be up to more than 50% for models that are "clearance products".
The price war begins
At the 2023 Annual General Meeting of Shareholders of Mobile World Investment Corporation (MWG), Mr. Nguyen Duc Tai - Chairman of MWG said that there were times when Mobile World's prices were several million VND higher than other stores, but this will soon end.
"As an investor, if you also invest in competitors, you will hear groans in the near future, and it will be long-term, not short-term. You should prepare for that spirit," Mr. Tai affirmed. MWG's leader also said that the change will not happen short-term but long-term, directly affecting competitors in the near future.
Mr. Nguyen Duc Tai ( right ) - Chairman of Mobile World, shared that he will make his competitors "groan" in the price reduction war.
According to experts, this is not only a statement about pricing strategy, but also a reason to rationalize profit cuts and be ready to clear inventory in the context of unsatisfactory business performance in the electronics industry in general. In the first quarter of 2023, many businesses in the electronics retail sector confirmed an unprecedented decline in business due to economic impacts.
The consequences are even more severe for large-scale, system-based units. In the recently released financial report, Mobile World has seen its profits drop to the level first recorded nearly 10 years ago. Specifically, in the first quarter of 2023, the unit achieved a profit of VND 21.28 billion, the lowest ever recorded since its listing in the first quarter of 2014. At the end of the first 3 months of the year, Mobile World only achieved 0.5% of the year's profit target. This result is even clearer when compared to the first quarter of 2022, when the company's profit reached more than VND 1,445 billion.
Heavy pressure to sell off warehouse
The financial pressure on large businesses is getting heavier, forcing them to cut costs and find ways to sell goods as quickly as possible to keep up with capital turnover and avoid leaving cash "dead" in the warehouse.
"The larger the business, the larger the warehouse, causing a huge amount of capital to be stuck in one place if the products cannot be sold. Cash flow pressure will force companies to clear their warehouses, accept selling at a loss to compete and rescue themselves first," the expert assessed.
However, when comparing the selling price of Dien May Xanh system with other systems such as Dien May Cho Lon, MediaMart, etc., the selling price of many products of this retail system is still much higher. This shows that Mr. Nguyen Duc Tai's declaration to sell at the cheapest price has not been fulfilled.
The pressure to sell off inventory is weighing down retailers.
The financial reports for the fourth quarter of 2022 clearly show that Mobile World's revenue in the last 3 months of the year reached VND 30,588.4 billion, down 15.4% over the same period in 2021. Profit after tax was VND 619.02 billion, down 60.4%, mainly due to increased financial, sales and business management costs.
In the first 2 months of 2023, MWG recorded revenue of VND 19,010 billion, down 25% year-on-year and completed 14% of the annual revenue plan (revenue plan of VND 135,000 billion). For the Mobile World and Dien May Xanh chains, in the first 2 months of the year, total revenue decreased by 32% year-on-year.
"The more retailers are under pressure to have unreasonable inventory, the more they will have to cut prices to solve cash flow difficulties, especially retailers with ineffective investments, putting pressure on the phone and electronics industry," said market analysts.
Previously, Mobile World also caused a lot of controversy when sending a document to partners notifying them of not paying rent during the closure period due to the pandemic and cutting a series of Bach Hoa Xanh retail systems due to poor business performance. In addition, there is currently a lot of information that due to the sharp decline in market purchasing power, Mobile World is forced to implement many policies to save costs, including cutting about 12,000 employees in the past 6 months.
Source link
Comment (0)