Petroleum enterprises enter retail market: Tien Phong

With existing petroleum outlet systems, Petrolimex and PVOIL, two major petroleum in Vietnam plan to invest trillions Vietnam dong open convenient stores.  

At recent annually general meeting, Petrolimex leaders announed a plan of setting up convenient stores with a huge investment capital.

According to Deputy General Director of Petrolimex Pham Quang Dung, after nearly 20 years of investment, the corporation has nearly 2,500 petroleum retail outlets nationwide and a large dealer network, covering 63 provinces and cities.

Facing fierce competition in petroleum market with participation of several major enterprises, Petrolimex plans a new development strategy, including building a system of convenient stores for enhancing corporation’s profits.

Annually, Petrolimex invests about $42.8 million to develop petroleum retail system near highways, roads. Averagely, the corporation opens about 70 stores every year. In other words, every 5 working days, it has a new petroleum station.

Having 2,500 petrol stations, Petrolimex, the corporation is in better position when competing with other retaling businesses. The idea to enter ratail market was proposed and deployed five years ago.

Since 2017, Petrolimex opened a convenience store called P-Mart, which was located near a Petrolimex petroleum station in Hoai Duc district, Hanoi to sell products manufactured by Petrolimex such as lubricant.

“It is challenging to build a retail system. We have to weigh carefully since we will face harsh competition with many domestic and foreign competitors including Circle K, 7-Eleven, VinMart ”, Dung said.

Gold mines

President & CEO of PVOIL Cao Hoai Duong said that petroleum enterprises getting involved in retail market has been popular in the world. Statistics in US market shows that, sales of energy drink like Red Bull in petroleum convenient stores of Shell corporation is much higher than in normal supermarket.

Two years ago, PVOIL had plan to open convenience stores at more than 600 petroleum stations owned by the corporation nationwide. Though this is a promising market that could bring huge profit, the business may face challenges as this model has not developed in Vietnam.

“Statistics from market survey companies in the world show that, profit from convenience stores and non-petrol services at petroleum stations accounts for 50% of total profit. The convenience stores bring high profit, ” Duong said.

According to the PVOIL leader, the biggest challenge is to have good management. Otherwise, the petroleum companies have to cooperate with other enterrises to develop the convenience store chain.

 "PVOIL choose to cooperate with experenced retailers for developing convenience stores at our petroleum stations,” Duong said.

Besides developing convenient stores system to compete with foreign businesses such as Circle K, B's Mart, Aeon, Mini Stop, 7-Eleven, Vietnamese retail giants such as Saigon Co.Op or Vingroup, are investing heavily in gaining market share.

Vingroup plans to open 4,000 Vinmart stores by 2020 by acquiring existing chains. Recently, from September 1, 2019, all eight supermarkets of the Queenland Mart system of Bong Sen Food Joint Stock Company have been renamed as Vinmart supermarkets.

End of last year, Vingroup spent more than $42.8 million to acquire Nhat Nam Investment Joint Stock Company, which owns the Fivimart supermarket chain and Vien Thong A chain.

In April 2019, VinCommerce, a member of Vingroup, which manages the VinMart and VinMart+ retail systems, announced the purchase of the 87 chain of Shop & Go stores for just $1.

Source: Tien Phong