Preliminary statistics show that by the end of December 2011, home appliance distribution had had the growth rate of less than 10 percent. A lot of supermarkets have incurred loss, while products have been left unsold. This proves to be quite different with the forecast given by GFK, a German technology market survey firm, which said that the home appliance market would see the growth rate of 40 percent this year.
Looking for new markets
Both small shops and big home appliance centers have reported the sale slowdown with very low profits or no profit. A 32 inch TV would bring the three percent at the highest. Meanwhile, the product is still considered as selling better than laptops, cameras, DVD players which do not bring profits.
The distribution centers have been very quiet, except the days when they run sale promotion campaigns. The economic downturn, which forces people to cut down expenses, has led to the lower demand for home appliances.
The shops on Hai Ba Trung Street, which is called the home appliance street, have complained the sales are just equal to 60-80 percent of that of the previous year.
Understanding that they cannot compete with big home appliance centers in the sale of popular products such as TVs, air conditioners, washing machines and refrigerators, the private shops have shifted to other kind of business, selling high grade audio and video equipments, professional cameras, recorders or high grade products carried out across the border gates by people. The products prove to be not the advantages of home appliance centers which specialize in distributing products imported through official channels or the products made domestically.
The owner of a private shop said that the number of available products of these kinds is not big, while the products are very choosy, because they only fit high income earners, but they can bring high profits.
He said that when selling a high grade audio equipment, the profit he can get is higher than the sale of a 32 inch LCD TV.
However, it is difficult to attract buyers to the private shops, because buyers are not sure about the origin of the products, which are introduced at carried to Vietnam by foreigners or overseas Vietnamese. Meanwhile, buyers cannot enjoy good post-sale services, because the shops cannot provide the technicians to fix errors. Especially, buyers would not be able to find spare parts in Vietnam, because the products are not available in big quantities.
Moving towards the outskirts
While private shops are aiming the niche markets, home appliance centers tend to move towards the suburb areas, where they believe the demand remains high, while the retail premises rents are low. Tran Anh and Media Mart have opened supermarkets in Long Bien district.
In the inner city, a square meter of retail premises has the rental of 30 dollars, while the figure is just 10 dollars in Long Bien.
A representative of Tran Anh said the newly opened supermarket in Long Bien district has attracted many customers from Hai Duong, Hung Yen and Bac Ninh provinces. The revenue of the supermarket is equal to that of both the supermarkets on Tay Son and Cau Giay streets.
Of course, the products displayed here are mostly popular products, such as cookers (180,000-300,000 dong). However, the number of products sold is very high.
Ha Dong district and Nam Thang Long area of Cau Giay district would be the new destinations of home appliance distributors.