FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL BUSINESS AND ECONOMICS
MASTER OF FOREIGN ECONOMICS
GRADUATION THESIS
Topic:
SPECIALIZED RETAIL MODEL AND DEVELOPMENT PROSPECTS IN VIETNAM
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Instructor
Student name Class: Pham Vo Anh Thu : English 17 : 44 : MSc. Pham Thi Thu Hien |
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Factors Affecting the Development of Retail Distribution Systems
Hanoi, May 2009
INTRODUCTION
1. Urgency of the topic:
In today's market, competition between retail businesses is fierce, not only in terms of products, services or prices but also in terms of sales methods. Responding to changes in consumer trends of Vietnamese people, especially young consumers, in recent times, a number of very successful sales models have emerged, such as Me Linh Plaza Furniture Supermarket, Mobile World Store, Media Mart Electronics Supermarket, Nguyen Kim Electronics Supermarket, or Made in Vietnam Export Clothing... The above models are not only successful in terms of scale and sales but also in terms of product management and distribution. Such sales models are called specialized retail models. Although this is a fairly new sales method, it has quickly developed and been widely applied in the Vietnamese market.
Determining the direction of the distribution model, management and sales promotion methods is a decisive factor for the success of a retail business. Unlike other types, when choosing a professional retail model, businesses only focus on a separate group of products. Thanks to that, the sales system will specialize in the products they sell in terms of brand, manufacturer and quality, so customers also tend to prefer specialized stores with a variety of product types in a product industry, professional service and advice from the sales team.
With the advantages of the specialized retail model, businesses increasingly tend to choose this model in their business strategy. However, because this is a fairly new model in Vietnam, businesses are still largely unaware of its advantages and disadvantages.
limitations of the model. The most typical lesson is the collapse of the Nettra mobile phone retail system after 13 months of operation. Therefore, studying the characteristics of this model to apply this model as well as develop it in the market conditions in Vietnam is extremely necessary.
Therefore, the thesis with the topic "Specialized retail model and development prospects in Vietnam" studies some typical specialized retail models in the world, and analyzes the collapse of the Nettra mobile phone business system to draw lessons for Vietnamese retail enterprises to promote the development of specialized retail models in Vietnam in the future.
2. Research objectives
The thesis aims at the following main objectives:
- Clarify general theories about specialized retail models, constituent elements and create competitiveness for the model.
- Analyze some typical specialized retail models in the world as well as in Vietnam to see the reasons for success and failure and draw lessons in model building.
- Evaluate the development prospects of this model in the Vietnamese market in the future and solutions to improve the model's operational efficiency.
3. Research object and scope
- Subject: Specialized retail models in the world and in Vietnam.
- Research scope:
Content: Research on factors affecting specialized retail models and how businesses build and manage models, how external and internal factors affect the success or failure of the model. Time: from 2000 onwards (due to the strong development of the new model)
and prospects for the period 2009 - 2011.
4. Research methods
- Desk research based on online and printed materials on retail theory, retail theory and specialized retailing.
- Synthetic logical reasoning for the conditions for building a specialized retail model, and the causes and factors affecting the model.
- Statistical analysis of data
- In addition, the thesis also uses a number of other methods to complete the research content.
5. Research layout
In addition to the introduction and conclusion, the structure of the thesis is divided as follows:
Chapter I: Overview of specialized retail model
Chapter II: The development of specialized retail models in the world and in Vietnam
Chapter III: Development prospects of specialized retail models in Vietnam
I would like to express my deep gratitude to Ms. Phan Thi Thu Hien, Faculty of Economics and International Business, and teachers of Foreign Trade University for giving me useful experiences in scientific research methods as well as spending precious time, guiding and helping me in the process of completing this graduation thesis.
During the research process, due to limitations in research level, information, and documents, the thesis inevitably has shortcomings. I hope to receive comments from teachers and readers.
Hanoi, June 2009
Student Pham Vu Anh Thu
Chapter I: OVERVIEW OF RETAIL MODEL
SPECIALIZED
General theory of retail
Definition of retail
Every human being has basic daily needs of food, clothing and transportation from one place to another and they have to buy products and services to satisfy these needs. That is when they enter the retail market. So what is retail?
“Retailing is all the activities directly involved in selling goods or services to final consumers for their personal, non-business use.”
( Source: Mc Cant (2004)- Introduction to Retailing, page 2)
Thus, a retailer can be viewed as a business person who focuses his selling efforts on final consumers with the aim of selling goods or services and earning profit. Those who provide goods and services to final consumers, who may be those who come to buy in a store, a supermarket, by telephone, home delivery or street vendors, are all retail businesses.
Retailing has a huge impact on our society in the present era. The large number of businesses involved in the retail market, the number of workers employed, the huge sales horsepower it generates confirms the importance of retailing to society. Compared to manufacturing and wholesale establishments, the number of retail businesses is seven times larger. In the US alone, retailers have revenues of trillions of dollars and employ about 25 million workers; the top ten retailers have annual sales of between 8 billion and 40 billion dollars. (Source: www.forbes.com)
Retailers play a vital role in adding value to the final products and services. This ensures that the needs and wants of the consumers are satisfied. Retailers are an important link between the producers and the final consumers as they create an environment for the exchange of goods with the final consumers. The customers are the beneficiaries of the marketing efforts of the retail businesses, creating a variety of products available in the market.
Types of retail
There are many different types of retail, so there are also many criteria for classifying retail. The following are common retail classification criteria:
a. According to the level of customer service provided to buyers , there are three types of retail stores: self-service stores; limited-service retail stores and full-service retail stores.
Self-service retail
Self-service retail stores provide very little customer service, so goods can be sold at low prices. For example, in the US, gas stations are mostly built according to this model, in which there is no appearance of employees to pump gas for customers as is often seen in Vietnam. Instead, customers pump gas for their vehicles and pay at a convenience store (open 24 hours) located right next to the gas station.
Retail stores that offer full service often sell at high prices, to serve customers who demand perfect products and services. Restaurants in high-end hotels are of this type, customers look at the menu and order dishes prepared according to their own requirements. Each waiter only serves one table to ensure that all customers' needs are met quickly. Customers come to these restaurants not only to enjoy delicious food but also to receive attentive and professional service.
However, these stores also face some disadvantages because they can only provide their services to a very limited number of customers, and the prices are high due to high costs of premises and labor.
b. According to the retail product criteria , people divide them into specialized retail stores, department stores, supermarkets, convenience stores, and high-end stores.
Specialty stores sell narrow, specialized product lines such as children's clothing stores, furniture stores, mobile phones, etc. For the postal and telecommunications sector, these could be retail Internet service providers or stamp stores.
Department stores (or shopping malls) sell a wide variety of goods, divided into many categories: clothing, household goods, electronics, etc. Each type of goods is displayed in a separate section of the store and is operated by staff who are knowledgeable about that type of product. In recent years, this type of store has been overshadowed by more focused and flexible specialty retail stores or discount or low-price retail stores.
Supermarkets, like department stores, sell a wide variety of goods, but customers serve themselves, so the prices are lower. In recent years, supermarkets have developed rapidly in large cities in Vietnam and have become a civilized, polite form of shopping with acceptable prices. Some of the large supermarkets that are present in our country today include Metro Cash & Carry, Big C, Co.op, etc.
Convenience stores are small stores scattered in residential areas, selling items that serve the regular needs of consumers, open every day of the week from early morning to evening, so prices can be slightly higher. The G7 Mart and Citimart Best & Buy chains are typical examples of this model.
c. According to the form of sale , it can be divided into two types: retail through stores and retail without stores.
Non-store retailing can take many forms such as mail order, telephone shopping, vending machine shopping, e-commerce, and home retailing.
Vending machines provide a variety of common goods such as stamps, cigarettes, soft drinks, newspapers, candy, etc. However, this form is not yet popular in Vietnam due to difficulties in payment methods.
Other forms such as mail order and telephone order are also becoming more and more familiar to Vietnamese consumers due to their simplicity and low cost. Selling via the Internet is now becoming popular, especially with items such as clothing, fashion, books, newspapers, etc.
d. By form of ownership , including independent retail stores, company-owned chains, retail cooperatives, exclusive dealers and franchises.
Independent stores are very popular in Vietnam, owned and managed by a private owner, using his own house or renting a shop to do business.
A chain store consists of multiple stores owned by a single company that sell similar merchandise, have centralized purchasing, and may have identical store architecture. Chain stores share common ownership and control, and have a uniform architectural style to distinguish each individual store and make it easier for customers to recognize. Chain stores have an advantage over independent stores in their ability to sell at lower prices and sell in larger volumes.
Retail cooperatives include independent retailers who voluntarily join together into an organization to operate a unified business to improve competitiveness.