VINCOM MEGA MALL ROYAL CITY CASE STUDY 2021

Theme: Rejuvenate the Future of Retail Experience

Annexure (Additional information)

I. Definitions of key concepts in the retailing sector

Catchment area: A retail catchment can be defined as the areal extent from which the main patrons
(i.e., customers) of a store or retail centre will typically be found (Dolega, Pavlis, & Singleton, 2016).
The catchment area analysis is essential in retailing business because customers often go to the closest
or most logistically convenient location for shopping. The catchment area of a shopping mall can be
determined by numerous methods. The simplest technique could be to draw buffer rings around the
mall place or to generate polygons using the distance and time that customers are willing to travel for
shopping (see Figure 1 for an example). In reality, there might be many shopping malls in densely
populated urban areas where retail catchments of these malls overlap. In this case, customer choice of
shopping malls to visit will be greatly influenced by the competition between these shopping malls.

Figure 1: Drive time polygons of 10 min, 20 min and 30 min generated for Liverpool Central, UK
(Source: Dolega, Pavlis, & Singleton, 2016)
Customer profile: A customer profile is a description of a business's typical customers (Cambridge
Dictionary). Customer profiles are often developed based on market research and customer
segmentation in order to have a better understanding of the needs, wants and expectations of specific
groups of customers (Calvo-Porral & Lévy-Mangin, 2019). Developing a customer profile is a critical
step to improve customer experiences, customer satisfaction and loyalty.
Customer experience: Customer today do not really desire services or products, but they seek and pay
for satisfying experiences. Customer experience can be defined as "a multidimensional construct

Page 1|6
focusing on a customer's cognitive, emotional, behavioural, sensorial, and social responses" (Lemon &
Verhoef, 2016, p. 71). Mapping and analyzing the customer journey are a critical step in customer
experience management, which should include all key customer touchpoints and pain points (pre-
consumption, on-site consumption, post-consumption).
Branding/rebranding: A brand was defined as a brand as a name, term, symbol, or design used by
customers to signal and communicate the source of the market offering (Aaker, 2012). Through brand-
related communications, the brand acts as a mechanism to build up the relationship between the
company and customers. Branding is the process of creating meanings associated with the market
offerings of the company through all marketing communications. Armed with more active digital
intelligence, companies can constantly adjust to changes in both consumer expectations and the
competitive landscape in faster, more responsive and personalized ways through the rebranding process.
Rebranding efforts focused on delivering a customer experience that brings brand and consumers
continually closer (Dixon & Perry, 2017).
II. Macroeconomic environment
Thirty years after economic and political reforms under Đổi Mới in 1986, Vietnam has spurred rapid
economic growth and becomes a lower middle-income country. Between 2002 and 2018, GDP per
capita increased by 2.7 times, reaching over US$2,700 in 2019. Even though poverty rates declined
sharply from over 70% to below 6% (US$3.2/day PPP), the vast majority of Vietnam's remaining poor
– 86% –are ethnic minorities. The Vietnamese economy has shown remarkable resilience in the context
of the COVID-19 pandemic, and its GDP still increased by 2.9% in 2020. However, the lasting impact
of the pandemic remains significant, with 45% of households reporting lower household income in
January 2021 than in January 2020. Vietnam's economy is expected to grow 6.6% in 2021 on the back
of successful control of COVID-19 infections, strong performance by export-oriented manufacturing
and robust recovery in domestic demand (WorldBank, 2021).
The Communist Party is aiming for Vietnam to reach a GDP per capita of $5,000 by 2025 and to be a
developed country by 2045. The goals are part of the Resolution of the 13th National Party Congress
held from January 25 to February 1 2021, the entirety of which has just been released by the Office of
the Party Central Committee. In the period between 2021 and 2025, the Resolution sets a target for
average GDP growth of 6.5-7%, GDP per capita by 2025 reaching $4,700-5,000 and the contributions
of total factor productivity (TFP) in economic growth reaching 45%, the labour productivity increase
hitting 6.5% a year, urbanization reaching 45%, the ratio of processing and manufacturing industries in
the GDP exceeding 25%, and the digital economy accounting for 20% of the country's GDP.
III. Prospect of the retail industry in Vietnam
With a young and growing population, Vietnam is a very potential retailing market. Vietnamese
population reached 96.5 million in 2019 (up from about 60 million in 1986) and is expected to expand
to 120 million by 2050. And Vietnam's emerging middle class, currently accounting for 13% of the
population, is expected to reach 26% by 2026 (WorldBank, 2021). Despite the serious impact of the
pandemic, Vietnam's retail market in 2020 expanded by 7% year-on-year or US$11 billion to a record
high of $172 billion, according to the General Statistics Office (GSO). In 2020, total retail sales of
consumer goods and services in Vietnam reached an estimated VND5,059.8 trillion (US$219.53
billion), up 2.6% against 2019 (Vietnamnet, 2021). The gross retailed revenue from consumption in the
period between 2016 and 2020 was 1.6 times the number of the period between 2011 and 2015. The
average growth rate in the period between 2016 and 2020 was approximately 9.4%/year, and the gross
retailed revenue from consumption can reach US$350 billion in 2025. Compared to countries in the
region, the total areas for retail and per capita are still low, only equal to 1/3 of the Philippines (see
figure 2 & 3 for more details). Therefore, AT Kearney ranked Vietnam the 11th developed retailing
market based on the global retail development index (VCR, 2021).

Page 2|6
Figure 2: Vietnam's disposable income per capita in comparison to the Philippines and Thailand
(Source: Vincom retail corporate presentation, 2021)

Figure 3: Net lettable area (NLA) per capita of HCM city and Hanoi in comparison with other big cities
in Asia (Source: Vincom retail corporate presentation, 2021)

Page 3|6
Figure 4: An overview of retailing market in Vietnam (Source: Vincom Retail corporate presentation,
2021)
IV. Key mega trends in retail industry
While the traditional shopping mall model is still popular in Vietnam, but already under increasing
pressure from e-commerce. The Covid-19 pandemic has shocked the retail industry and create an
uncertain environment for mall landlords and retailers. Even when the travel restrictions are lifted,
shopping malls have to create a reason for customers to return to the malls. Instead of trying to compete
with the endless product selection, price comparisons, ultimate convenience and always-on nature of
online shopping, shopping malls need to move in a different direction, away from commoditized
shopping experiences and toward a broadened value proposition for consumers (McKinsey, 2014).
Against this background, shopping malls of the future must become the new community place, a multi-
purpose destination (see figure 5) offering extensive shopping services, food and beverage services,
leisure activities and cultural amenities (i.e., short-term pop-ups or exhibitions or events) (Deloitte,
2021).

Figure 5: The future retail store network (Source: CBRE (2020))

Page 4|6
More importantly, technology will shift from retail disruptor to enabler. Consumer analytics, in-store
automation and mobile payment have been identified as the most important tech innovations in the next
decade (CBRE, 2020). According to AC Nielsen, Omni-channel continues to play a very important role
to connect retailers and consumers. Shopping mall still is at the centre of many activities, and young
consumers are the engine of stylish retail. In a survey of the Asia Pacific retail in 2020, 68% of retailers
agreed that stores/shops should arrange an area for click and collect service. They prefer to experience
online-to-offline (O2O) model, meaning that they may place order online then come to shopping malls
to try and pick up products.
(*) NOTE: Students are recommended to read the full reports on the future of the Mall by Deloitte and
CBRE.
V. Key players in Northern Vietnam (Beside Vincom Retail)
Up to 2025, Aeon will operate 25 shopping malls in Vietnam with US$ 2 billion of investment. The
leader of the group has expressed the determination to speed up the investment of new shopping malls
in Vietnam, especially in Hanoi. From 01/01/2017 to now, Aeon Vietnam has officially launched an
online shopping site at www.AeonEshop.com to make shopping easier. Aeon Eshop's initial success
stems from its products' variety and quality. With a focus on selling high-quality Japanese goods to
meet customers' demand, the site has quickly established its foothold and become customers' favourite
shopping destination. In contrast, numerous other online sales websites have to be stopped after a short
time of operation.
According to RetailNews Asia, April 19, 2021, Aeon Eshop's operation has been pretty successful. Its
products are always ensured to be updated and diverse to meet Vietnamese consumers' needs and high
standards. Recently, the site has made a big step by expanding its reach to the northern provinces of
Vietnam like Hanoi, Vinh Phuc, Bac Ninh, Hung Yen and Hai Phong to satisfy customers who enjoy
using Japanese goods.
Hanoi is usually considered a difficult market due to geographic conditions, people's traditional
consuming habits and shopping culture. However, for those who are fond of Japanese goods, this is
good news and marks a new beginning in AeonEshop's attempt to access the northern region, which
has a lot of potential for development.
Another player, Big C, the used to be the symbol of supermarket in Vietnam in the last 20 years, is now
undergoing many other names: GO!, Tops market, go!. This move has surprised consumers when Big
C has been a very successful brand in the retail industry. Since beginning 2021, 7 Big C (Nha Trang,
Di An, Can Tho, Ha Long, Vinh Phuc, Nguyen Thi Thap, Hai Phong) have officially carried the new
brand name. The announcement revealed that it was in the rebranding strategy that Central
Retail/Central Group (Thailand), owner of Big C undergoes in Vietnam. In many years, Central Retail
has invested in hypermarket chain GO! in many shopping malls GO! in My Tho, Ben Tre, Tra Vinh,
Buon Ma Thuot, Quang Ngai to enlarge and make their presence more visible in Vietnam. In addition,
since March, three Big C in HCM city have transformed into Tops market. Four Big C in Hà Nội has
been planned to transform to the Tops market in Q3 this year.
Vietnamese consumers may not be familiar with those brand names. Still, Tops are the number 1 food
retail brand in Thailand and the ecosystem including hypermarket Tops, supermarket Tops, convenience
store Tops daily under Central Retail. By the end of 2020, Central Retail owned 66 food and consumer
good distributors in 29 provinces in Vietnam. They are 41 supermarkets GO!/Big C, 24 supermarket
Lan Chi, and 1 mini-mart go!. The group has planned to open more than 300 shopping malls,
hypermarkets, supermarkets in 55 cities and provinces. They will open 106 new shopping malls
GO!/Big C, 134 mini go!, and 21 Tops market. The Tops market chain, converted from Big C, targets
Page 5|6
urban consumers. Tops market serves as the foundation for Central Retail implementing Omnichannel
(đa kênh) strategy and launching app Tops Mobile. In 2021, Central Retail will open 10 new GO!, 3
new Tops market and transform 7 Big C into Tops market.
Big C does not simply change the name. Its strategy directly threatens Aeon, Saigon Co.op. The group
plans to develop the shopping mall chain GO!, inside is hypermarket GO! in 2021.. Central Retail
reveals that their targeted customers are from 25 – 44 and have redesigned their premises to attract the
new targeted segmentation.. Central Retail has been using Omnichannel with their strength of
combining physical points of sales and digital platform. In 2020, revenue from omnichannel increased
by 177%, contributed to 9,5% to gross revenues. Omnichannel concentrates in Thailand, where the
retail market is much better developed. Central Retail states that app Tops, Big C/GO! will be launched
from March-May 2021, and shipper service platform GO! OI in June.

REFERENCES
Aaker, D. (2012). Building strong brands. New York, U.S: Simon and Schuster.
Calvo-Porral, C., & Lévy-Mangin, J.-P. (2019). Profiling shopping mall customers during hard times.
Journal of Retailing and Consumer Services, 48, 238-246.
CBRE. (2020). The Future of Retail: A view of 2030.
Deloitte. (2021). The future of the Mall. Canada.
Dixon, P., & Perry, H. (2017). Rebranding today: A process, not a project. Journal of Brand Strategy,
6(2), 139-145.
Dolega, L., Pavlis, M., & Singleton, A. (2016). Estimating attractiveness, hierarchy and catchment area
extents for a national set of retail centre agglomerations. Journal of Retailing and Consumer Services,
28, 78-90. doi: https://doi.org/10.1016/j.jretconser.2015.08.013
Lemon, K. N., & Verhoef, P. C. (2016). Understanding customer experience throughout the customer
journey. Journal of marketing, 80(6), 69-96.
McKinsey. (2014). The future of shopping malls. from https://www.mckinsey.com/business-
functions/marketing-and-sales/our-insights/the-future-of-the-shopping-mall
VCR. (2021). Vincom Retail Corporate Presentation.
Vietnamnet. (2021). Vietnam retail market records $172 billion in 2020. from
https://vietnamnet.vn/en/business/vietnam-retail-market-records-172-billion-in-2020-702957.html
WorldBank. (2021). The World Bank in Vietnam. from
https://www.worldbank.org/en/country/vietnam/overview#:~:text=Vietnam's%20economy%20is%20s
et%20to,robust%20recovery%20in%20domestic%20demand.

Page 6|6