In 2005 a forward-thinking entrepreneur opened a convenience store in the gas station on the corner of Saigon’s Hai Ba Trung and Tran Cao Van streets. The move was visionary — yet it failed. Within months the store closed down.
Fast forward a decade later — while Hanoi has yet to take the bait, in Ho Chi Minh City the convenience store is everywhere. Now the wars are here, with Circle K, Family Mart, Shop & Go and B’s Mart battling for customers. So intense is the conflict that the chains are opening new outlets almost every week.
What’s behind this sudden convenience store explosion? Is it the product mix, the international look and the aircon — or is it something else? And how is the traditional corner shop, the tap hoa or mama and papa grocery store, managing to fare? Unlike in the west, where it was the supermarket that dealt the fatal blow to the once ubiquitous grocery store, something else is happening here. Is the convenience store doing the same in Vietnam?
I decided to investigate.
I started at Circle K on Xuan Thuy in Ho Chi Minh City’s District 2. It wasn’t the first convenience store to open in the area. That accolade goes to a smaller Circle K that appeared on Thao Dien in 2012. But it’s the larger of the two stores, and certainly the only one with proper seating.
My first move was to do a price watch on a small basket of goods. Here’s what I found at Circle K.
330ml can of Coca-Cola — VND11,000
500ml bottle of La Vie — VND5,500
Xylitol chewing gum — VND5,500 or VND6,000, depending on the flavour
Craven ‘A’ cigarettes, pack of 20 — VND20,000
54g Poca ready-salted potato chips — VND10,500
As I discovered later when I went to my favourite corner shop, the ramshackle joint two blocks away on the corner of Quoc Huong and Le Van Mien, the prices at Circle K were between 10 and 20 percent higher. This was for everything on the list except for the Poca potato chips, which were the same price. And Circle K had a special offer on the larger bags.
On a trip to nearby competitors Family Mart and B’s Mart, I discovered that these two chains position themselves as a cheaper alternative, although prices are still five and 10 percent above the standard no-name corner store. A can of Coca-Cola was going for VND9,000 in both places while a La Vie bottle cost VND5,000. In my favourite corner shop, Coca-Cola was a mere VND8,000.
In my mind, Circle K is the market leader. It has the highest profile — the brand sponsors a number of large-scale, youth-orientated events and gigs, and they are exclusive ticket-sellers for some of the largest of these events. They have constant competitions in store, a range of promotions, sell the Circle K equivalent of iced drinks such as Slush Puppy, and have a distinct American theme. They are also more expensive.
Yet the youth flock to Circle K in droves, as they do to Family Mart and, to a lesser extent, B’s Mart. So what are the convenience stores doing right?
In 1950s America, a time of peace and prosperity, a new market opened up — the youth market. With a low birth rate in the 1930s and an abundance of jobs, this was the first time when teenagers and young adults had money to spend. It was also the first era in which the word ‘teenager’ became widely used.
Suddenly teenagers and college students had cars, nice cars. They would go to drive-thru restaurants or neon-lit diners, could afford nice clothes, listened to a new kind of music — rock ‘n roll — and they began to ‘hang out’.
A similar social revolution has been taking place in Vietnam. New music — mainly K-pop — has taken over YouTube views and MP3 players. A pop culture has developed that is growing ever more individual, ever more varied, ever more exciting.
With greater prosperity — Vietnam is now a middle-income country — young people have money to spend. Large numbers of teenagers and young adults now have their own transport, and like the American youth of 60 years ago, they like to hang out.
In the Circle K I often go to on Nguyen Khac Nhu in District 1, both after and before school the place is packed with school kids. Some are buying snacks — soft drinks, fast food, potato chips, candy — others are quite simply hanging out in the seating area, gossiping with their friends. They’re spending money, not much, but they’re spending.
And in the Family Mart I check out on Quoc Huong in District 2, the outside seating area is monopolised by uniformed university students from the newly opened campus of Saigon International University, a few doors down the road. Some are just drinking bottles of water, while others have taken advantage of the cheap snacks.
And this is what all the convenience stores have done well. The snacks.
In Family Mart, fried Japanese-style stick snacks cost between VND5,000 and VND10,000 a go. You can also get fried chicken drumsticks for VND19,000 a piece. While in Circle K, the menu includes grilled sausage (VND20,000), hot dogs (VND23,000), mixed instant noodles (VND6,000) and banh mi op la (VND9,000). And there’s a range of iced soft drinks at cheap prices.
Mix this all with aircon — it gets hot in Saigon — and free Wifi, and you have the perfect spot for kids to hang out on the cheap.
But there’s another addition to the formula — choice. When I was in Circle K, I counted 113 types of soft drink and 15 brands of beer. In Family Mart, the soft drink selection was down to 75, while the beer selection hit a heady 19. There is something for everyone.
Back to the Grocery Store
That the convenience stores have managed to tap into this new and growing market is ingenious. Before they introduced the fast food concept, free Wifi and in-store seating, they struggled. There were only a few stores around, and being more expensive meant less customers.
Yet 60 percent of the Vietnam’s population is under 30. And with GDP growth in 2013 at 5.4 percent and growing, more of this youth qualifies for middle-class status, year by year — which means more disposable income. Through a process of trial and error led by Circle K, the convenience stores have now found their market.
They haven’t quite changed the way people shop. That’s the role of the supermarket, the shopping mall and online shopping. Rather, they have created a place for young people to hang out on the cheap. And they’re providing choice, a choice that previously just did not exist.
Close to Home
At my favourite corner shop, I ask the owner about business. She’s positive.
“We’re still doing okay,” she explains, “and we still have our regular customers.” This is despite now having two Family Marts, a B’s Mart and a Circle K in close proximity.
“The convenience stores are so expensive,” she adds. “No-one goes there.”
“Maybe at night?” I venture, not wanting to openly disagree. “They are open 24 hours.”
“Yes,” she says. “Possibly at night. But only young people go to these places and they don’t have much money.”
I laugh. It’s true.
A Matter of Price
As I discovered after I wrote this piece, Circle K’s prices change depending on the area in which each store is located. So, the outlets in District 2 and Pham Ngu Lao, ‘wealthy’ areas with a large numbers of foreigners, are more expensive. Elsewhere, prices are closer to market standard.
The difference between the two pricing levels is about 10 percent.