WinCommerce to redefine Vietnam retail market with new retail model

Leading modern retail chain in Vietnam - WinCommerce is confident in the massive potential of the country’s retail market and feels there is room to "redefine" it with a new retail model.

One stop shop

In a report earlier this year, market research firm IndianRetailer remarked that billionaire Mukesh Ambani's Reliance Retail was "the giant changing the face of retail in India." Reliance Retail, founded in 2006, is a subsidiary of conglomerate Reliance Industries.

Starting as Reliance Fresh, a mini supermarket chain serving consumers' daily necessities, Reliance Retail has grown to become India's largest retailer with a network of nearly 19,000 physical stores and many online platforms.

Reliance Retail's product portfolio is diverse and spans across multiple sub-sectors such as food, fashion & lifestyle, consumer electronics, health & beauty, wholesale, and convenience stores.

A major factor contributing to Reliance Retail's pacey growth is its expansion strategy, which integrates both vertically and horizontally many fields through merger and acquisition (M&A) deals over the years.

For example, in 2013, Reliance Retail's acquisition of HyperCity helped the former enter the hypermarket and wholesale sectors. A year earlier, the emergence of Reliance Jio provided affordable data packages and widespread telecom services, pushing digital transformation across India.

Since 2007, Reliance Retail has successfully acquired Trent Limited, Hamleys, Netmeds, and others to turn these manufacturers into private-brand products commonly sold in Reliance Retail's supermarket chain.

These acquisitions are key to Reliance Retail's penetration into physical retail and e-commerce, The Economic Times notes. The company is looking beyond retail, pursuing a larger plan to tap a growing share of the Indian consumer market, including contract manufacturing and distribution of a wide range of products from affordable fashion and consumer electronics to groceries.

India's retail market is expected to grow to $1.3 trillion in the next few years from $850 billion annually, and Reliance Retail doesn't want to miss out.

Analysts say Reliance's master plan is to attract Indian consumers into its ecosystem in every way possible: shopping at its vast network of stores or on its e-commerce platform JioMart, using Jio's mobile network and WiFi, watching movies on Jio Cinema, paying via Jio wallet. The conglomerate calls this its "retail plus" strategy.

WinCommerce - Point of Life

In Vietnam, WinCommerce, the retail brand under Masan Group, is on a similar path as Reliance Retail.

After joining Masan Group in 2019, WinCommerce has gradually pursued its "Point of Life" strategy as an "all-in-one" destination serving essential needs in daily grocery (FMCG, retail, fresh/processed meat), financial needs, lifestyle (entertainment and healthcare), accounting for up to 80% of consumer spending.

To integrate multiple services in the same store, Masan Group has also engaged in M&A transactions.

In 2021, it spent nearly VND300 billion ($12 million) on acquiring 70% of Mobicast, owner of the virtual mobile network Reddi (now renamed as Wintel), thereby entering the telecommunications sector and integrating digital services into its retail consumer platform.

It also spent hundreds of billions of VND (VND1 billion = $40,200) on acquiring Net Detergent – a detergent business holding 1.5% of the market share; and 3F Viet, making its entry into the poultry market. Most recently, it acquired Phuc Long - a beverage chain among the best EBITDA margin in the food & beverage (F&B) industry.

WinCommerce's retail supermarket system is also empowered by Masan Consumer, a subsidiary under Masan Group that owns billion-dollar food brands such as CHIN-SU and Omachi. This helps WinCommerce develop its brands, thereby increasing competitiveness and improving profit margins.

Masan Group also has its own logistics company, Supra, which is dedicated to serving WinCommerce.

Established in 2022, Supra now owns 10 warehouses nationwide, delivering up to 60% of WinCommerce's total goods. According to WinCommerce, using Supra's logistics services helps reduce 11% of its transportation costs.

With this tactic, WinCommerce has integrated all services like essential goods (Masan Consumer), F&B (Phuc Long), finance (with associated lender Techcombank), telecommunications (Wintel) and healthcare (Dr. Win) into its point of sale (POS) units WinMart, WinMart+ and WiN.

Currently, WinCommerce operates nearly 3,700 WinMart supermarkets, covering 62 out of 63 provinces and cities in Vietnam, making up half of all modern retail supermarkets nationwide.

Beyond physical stores, WinCommerce is looking to penetrate online sales channels. Masan joined hands with Alibaba in an investment deal, thereby bringing WinMart to customers on the Lazada e-commerce platform, which has the third largest market share in Vietnam.

Dr. Vo Tri Thanh, director of the Institute for Brand and Competitiveness Strategy, said: "Many customer segments can find what they need in Masan's retail ecosystem. When WinMart+ convenience stores expand to rural areas, it will open up a new, more modern and higher quality lifestyle."

Wide open market

WinCommerce's steadfast pursuit of a multi-utility strategy in one POS and mini mart has brought fruitful results. In the second quarter of this year, for the first time in six years of building, the retail sector of Masan Group recorded post-tax profits.

In recent years, WinCommerce's revenues have fluctuated around VND30,000 billion ($1.2 billion) to make it top 3 retailer in Vietnam.

Recently, WinCommerce announced that the company had achieved positive net profit after tax in July, marking the second consecutive month of profit.

WinCommerce's achievements have been attributed to its persistence with the mini supermarket model, steady improvements in revenue and profits at each POS, and cost optimization.

A report from Statistics 2023 indicates that India has the sixth highest rate of two-wheeled vehicle ownership globally, a characteristic it shares with Vietnam, the second-largest market for two-wheeled vehicles after Thailand. This factor significantly influences the strategies of Reliance Retail and WinCommerce.

Consequently, both industry giants have committed to the mini supermarket model, "one stop shop” leveraging the high number of personal motorbikes in Vietnam and the daily market visits typical of local consumer behavior.

WinCommerce has consistently developed mini supermarkets, targeting rural areas where traditional retail has been deeply rooted in consumer habits, with the goal of reaching 50 million customers.

According to Euromonitor, modern retail in Vietnam is still in early stage as it accounts for just 12% of the market share, indicating that WinCommerce still has a lot of room to expand in the modern retail market.

In a new retail industry report, analysts with Ho Chi Minh City-based Viet Dragon Securities (VDSC) emphasized that Vietnamese consumers' shopping habits were transformed in the 2019-2021 period due to the Covid-19 pandemic. Consumers are gradually adapting to purchasing through online and modern retail channels, the report says

Meanwhile, analysts have pointed out that modern grocery retailers restructured their operational models to capture this trend in 2021-2023. They prepared to deploy effective operating models in 2023 and will enter a period of expansion and profitability from 2024.

At the annual general meeting earlier this year, Nguyen Thi Phuong, WinCommerce CEO said that by the end of this year, the brand aims to have more than 4,000 stores, equivalent to launching a new store daily.

WinCommerce's confidence in its expansion plan is backed up by the country's high market potential, the large market share of WinMart and WinMart+, and positive signals from consumption habits, analyst say.

A report shows that if Vietnam's modern retail market develops like Indonesia, a country in the region with many similarities in terms of population and consumption habits, the size of the Vietnamese market can triple in the next decade, reaching nearly $20 billion.

Masan Group has affirmed: "Since acquiring the WinMart supermarket chain in 2019, we have seen that there is still much room for the modern supermarket industry because the market size of the modern sales channel is $7 billion, accounting for 12% of the Vietnamese retail market worth more than $55 billion. In the coming time, we will see a lot of shifts from traditional channels to modern channels."