Parkson Vietnam's last mall in Ho Chi Minh City
HANOI: Vietnam is considered an appealing market for domestic and foreign retailers, thanks to its stable socioeconomic and young and large population, with the fast growth of the middle class.
Therefore, the collapse of Parkson Vietnam is most likely attributable to its inappropriate business strategy.
After 18 years of operation and expansion, Parkson Retail Asia said that it would depart Vietnam due to business losses, according to a filing submitted to the Singapore Stock Exchange.
Parkson Vietnam filed for bankruptcy on April 28 with the court in Ho Chi Minh City.
Tan Sri William Cheng, the chief executive officer of Parkson Retail Asia, said that previously, Parkson Vietnam had a history of operating at a loss for many years, while the pandemic created an additional challenging business environment.
Rising costs and the appearance of many competitors made it not possible for the company to operate here.
Parkson landed in Vietnam in 2005 and developed a chain of high-end shopping centres in big cities including Ho Chi Minh City, Hanoi and Hai Phong.
It also opened several stores in Indonesia and Myanmar, however, they were eventually shuttered.
It witnessed outstanding success during 2005-2010, with the Vietnamese market continuing to contribute favourably to the Malaysian retail group’s sales and profit in its 2009 annual report.
However, since 2011, the department store-oriented business model has begun to show certain flaws.
This was particularly when a new type of shopping complex with many activities ranging from shopping to entertainment developed.
Parkson had to shut four department stores in Vietnam in 2018.
Experts said that the behaviour, habits, capabilities and consumption preferences of customers varied by location.
And this strongly affected the operation of department stores.
These stores adhere to fixed principles that are difficult to change.
Parkson itself has acknowledged the need to innovate in all aspects to adapt to Vietnam’s competitive retail market.
In the first half of 2019, it was aimed to be a destination that integrated shopping, dining, and entertainment.
Basically, an all-in-one destination, serving a wide range of customers.
However, the decision to change is obviously unable to save Parkson from collapse because the retail market’s pie is getting smaller and smaller.
Vietnamese firms have remained essential players in the shopping centre industry over the years.
This is owing to better access to land sources and good sites in big cities and urban areas.
With 83 retail complexes in 44 provinces and cities, Vincom Retail has the greatest market share.
It is also the only investor with three new shopping centres opening in 2022, with an occupancy rate of more than 94%.
In the first quarter of 2023, Vincom Retail posted a record net profit of up to 1.02 trillion dong (RM195mil).
This figure was up 171.2% year-on-year.
Moreover, foreign investors see strong growth in the Vietnamese retail market.
This is especially after the government allowed the establishment of retail units with 100% foreign capital, such as Central Retail, Aeon, or Lotte. — Viet Nam News/ANN
