Vietnam retail major Mobile World stops fashion chain, Bluetronics Cambodia

Vietnamese retail heavyweight Mobile World Group (MWG) has decided to close down its domestic fashion chain AvaSport and Cambodia electronics chain Bluetronics to focus on other business models.

Cambodia’s current population is about 16.6 million people, equal to the population size of the Greater Ho Chi Minh City region in southern Vietnam.

MWG, headquartered in HCMC, marked its first international foray in 2017 by launching its phone chain BigPhone in Cambodia in 2017. The retailer in 2020 upgraded the phone distribution network to an electronics chain and renamed it Bluetronics.

Bluetronics had gradually increased the number of Bluetronics stores to 55 across the kingdom but has scaled down and is operating only two ones, both in the capital of Phnom Penh, MWG chief executive Doan Van Hieu Em told the group’s investor meeting last week in HCMC.

He explained the Cambodian market has a small size, and the Bluetronics chain will stop operation within this first quarter.

“Actually, our business in Cambodia is not bad,” he said, adding that Cambodian tax rules are rather complicated, forcing the retailer to sell items at prices higher than the market average, and if it makes prices equal, there will be no profit.

Closing in Cambodia will help MWG compete better in Indonesia, its second Southeast Asian market, Em said.

The Vietnamese retailer launched opened its first brick-and-mortar outlet, named Era Blue Electronics, in Indonesia last November via a partnership with Indonesian distributor Erafone Artha Retailindo, an Erajaya Group subsidiary. As for its Indonesia foray, Em said at that time that the new joint venture expected to gain a market share of 20-40% in five years, then an initial public offering would be considered.

In Vietnam, MWG has regularly tested new business models. It launched in early 2022 clothing and jewelry under the AvaFashion, AvaSport, AvaKids, and AvaJi brands, together with the AvaCycle bicycle store. AvaCycle was incorporated into the retailer’s Dien May Xanh home appliances chain. However, AvaFashion closed down last June.

For now, it has also decided to close down AvaSport because the brand has not been as profitable as expected due to weak demand in the domestic market and high business costs. According to Em, the CEO, this closing would help his corporation ease some business burdens this year, which is still forecast to undergo economic headwinds.

MWG reported an after-tax profit of VND4,101 billion ($174 million) in 2022, down 16% year-on-year, fulfilling 65% of its plan. It recorded net revenue of VND133,405 billion ($5.66 billion), up 8%, according to its consolidated financial report.