1. 1
FOREIGN TRADE UNIVERSITY
FACULTY OF BUSINESS ADMINISTRATION
GRADUATION REPORT
Major: INTERNATIONAL BUSINESS MANAGEMENT
DEVELOPING THE RETAIL ACTIVITIES AT HA
TINH BOOK AND EQUIPMENT EDUCATION JOIN
STOCK COMPANY (HBE)
Student name : Duong Duc Tung
Student code : 1001020172
Class : A1 – High quality class
Intake : Course 49 – Faculty of
Business
Administration
Supervisor : Ms. Nguyen ThuyAnh, PHD
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Table of content
List of tables....................................................................................................................4
List of charts ...................................................................................................................4
List of abbreviation........................................................................................................5
Chapter 1 Introduction..................................................................................................6
1.1 Research Background..........................................................................................6
1.2 Research Objectives.............................................................................................7
1.3 Research Tasks.....................................................................................................7
1.4 Research Methodology ........................................................................................7
Chapter 2 Literature Review ........................................................................................8
2.1 The definition of retailing....................................................................................8
2.2 The roles and purposes of retail activities .........................................................8
2.3 The types of retail activities ................................................................................8
2.4 The Retail Theories............................................................................................10
2.4.1 Central place theory.......................................................................................10
2.4.2 Supply chain theory.......................................................................................12
2.4.3 Merchandise placement theory. ....................................................................13
Chapter 3 Fact of retail activities of HBE..................................................................16
3.1 Overview of HBE ...............................................................................................16
3.1.1 Establishment and development of HBE......................................................16
3.1.2 Organizational structure of HBE..................................................................19
3.1.3 Financial situation of HBE...........................................................................21
3.1.4 Significant achievements of HBE.................................................................25
3.2 Overview of Vietnam Retail Market................................................................26
3.2.1 Vietnam’s Retail Industry and the Cases from Giant Retail Brands ..........26
3.2.2 The Situation of Book and Equipment Retail Market in Vietnam..............30
3.3.1 Infrastructure.................................................................................................32
3.3.2 Human resources...........................................................................................33
3.3.3 Logistic System...............................................................................................35
3.4. Evaluate the situation of retail activities of HBE...........................................36
3.4.1 Strengths ........................................................................................................36
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3.4.2 Weakness........................................................................................................36
Chapter 4 Recommendations for developing retail activities in HBE ....................38
4.1 Corporate with other local retailers in order to improve financial
capability and logistic systems ....................................................................................38
4.2 Enhancing Customer Service............................................................................39
4.3 Creating an appealing store atmosphere .........................................................40
4.3.1 Lighting..........................................................................................................41
4.3.2 Highlighting Merchandise ............................................................................41
4.3.3 Energy-Efficient Lighting .............................................................................42
4.3.4 Color...............................................................................................................42
4.3.5 Music..............................................................................................................42
4.3.6 Scent ...............................................................................................................42
Chapter 5 Conclusion...................................................................................................43
References .....................................................................................................................44
Appendices ....................................................................................................................46
HBE’s human resources qualifications..................................................................46
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List of tables
Table 1 : HBE’s organization structure 18
Table 2 : Revenue of HBE from 2010 – 2013 22
Table 3 : Profit of HBE from 2010 -2013 23
Table 4 : Asset of HBE from 2010-2013 24
List of charts
Chart 1 : Revenue growth of HBE from 2010 - 2013 22
Chart 2 : Profit growth of HBE from 2010-2013 23
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List of abbreviation
AFTA ASEAN FREE TRADE AREA
GDP GROSS NATIONAL PRODUCT
GRDI GLOBAL RETAIL DEVELOP INDEX
HBE HA TINH BOOKS AND EQUIPTMENT EDUCATION JOIN STOCK
COMPANY
IMF INTERNATIONAL MONETARY FUND
IGD THE INITIATIVE FOR GLOBAL DEVELOPMENT
SCM SUPPLY CHAIN MANAGEMENT
WTO WORLD TRADE ORGANISATION
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Chapter 1 Introduction
1.1 Research Background
In any economy, retail activities always play a very foundation and
beginning role of exchanging commodities process, encouraging consumption and
creating added values, growth for any countries. It is possible to compare retail
activities as the back bones of the whole economy. The back bones must stay strong
then the body would have developed sustainable.
In normal life, we could see the retailing existing anywhere around us
without us realizing. In the morning village market, we can see many women riding
bicycles with some kilogram of mango, watermelon, bananas… or a man with a
table full of pork, cow…or an elder with a pack of tea leafs, few rolls of vegetables
harvesting from their own garden.
In company store level, retail activities is the direct way to supply goods and
commodity to consumers, which helps customers realize brand name, trade mark
and is the very first step to generate profits for company. But how to develop a
suitable retailing model for the products of company, as well as analyze the impact
of these model on the effective of company operation.
Since I always feel attracted to books and retailing, and by the way talking
about books, from my point of view, books contain the unlimited knowledge, all of
the mind of wises man all over the world from past to present, it is the precious
material which helps self-study if we know the way to use it. Books help open our
mind, calm the helpless soul, erase the evil in each of us and spread the emotion…
with books, the life is become easier, worth living and everything becomes clear.
That’s why, in this graduate report, I choose the topic: “Developing the
retail activities at Ha Tinh Book and Equipment Join Stock Company”. I hope
I could apply the knowledge that I gain during school time as well as these I absorb
myself from society to discover more deeply about this topic, and find out how to
apply the results from this research in to the real life.
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I am truly indebted to Ms. Nguyen Thuy Anh, PHD who has helped and
encouraged me from the very first step of the report. Within my limited knowledge
and difficulties in filing materials for new topic, mistakes and faults are
unavoidable. Therefore, I appreciate all the comments from readers to improve my
report.
1.2 Research Objectives
I desire to achieve the following objective: Finding out the solution to which
improve retail activities in HBE within their limited sources in order to increase
company’s profit.
1.3 Research Tasks
I have been wondering so many issues about retail activities. Since the time
and my ability are limited, I would hope to clear some following questions:
- What is the insight of retail activities?
- What is the definition of retailing?
- What are the roles and purposes of retail activities?
- How many types of retail activities?
- How to improve retail activities at retail store?
- How do the situation of retail activities in HBE, as well as Vietnam retail
market look like?
- What are strengths and weakness of HBE’s retail activities?
- What are opportunity and threats toward HBE’s retail activities?
- What could be made to improve the retail activities of HBE?
1.4 Research Methodology
My research methodology requires gathering relevant data from the specified
documents and compiling databases in HBE in order analyze the material and arrive
at a more complete understanding of the situation of HBE.
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Chapter 2 Literature Review
2.1 The definition of retailing
“Retailing is the set of business activities that adds value to the products and
services sold to customers for their personal or family use. Often people think of
retailing only as the sale of products in stores, but retailing also involve the sale of
services such as overnight lodging in a motel, a doctor’s exam, a haircut, a DVD
rental, or a home-delivered pizza. Not all retailing is done in stores.” (Michael Levy
& Barton A.Weitz, p.6)
2.2 The roles and purposes of retail activities
In the value chain, the retailer is the final link connecting the producers to
consumers. Retail activities are often aimed at three mains purposes:
Firstly, sales function – it means put the products to consumers.
Secondly, use point of retail as a communication channels to interact with
consumers.
Thirdly, do verifiable price channel and product quality for customer
services.
2.3 The types of retail activities
Mom-And-Pop Stores: is a retail outlet that is owned and operated by
individuals. The range of products are very selective and few in numbers. These
stores are seen in local community often are family-run businesses. The square feet
area of the store depends on the store holder.
Specialty Stores: A typical specialty store gives attention to a particular
category and provides high level of service to the customers. A pet store that
specializes in selling dog food would be regarded as a specialty store. However,
branded stores also come under this format. For example if a customer visits a
Reebok or Gap store then they find just Reebok and Gap products in the respective
stores.
Department Stores: often bear a resemblance to a collection of specialty
stores. A retailer of such store carries variety of categories and has broad assortment
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at average price. They offer considerable customer service. For example: Food
World in Bangalore.
Discount Stores: offers extensive assortment of merchandise at affordable
and cut-rate prices. Normally retailers sell less fashion-oriented brands. However
the service is inadequate.
Convenience Stores: is essentially found in residential areas. They provide
limited amount of merchandise at more than average prices with a speedy checkout.
This store is ideal for emergency and immediate purchases.
Hypermarkets: provides variety and huge volumes of exclusive
merchandise at low margins. The operating cost is comparatively less than other
retail formats.
Supermarkets: is a self-service store consisting mainly of grocery and
limited products on nonfood items. They may adopt a Hi-Lo or an EDLP strategy
for pricing. The supermarkets can be anywhere between 20,000-40,000 square feet.
Malls: has a range of retail shops at a single outlet. They endow with
products, food and entertainment under a roof.
Category Killers or Category Specialist: By supplying wide assortment in
a single category for lower prices a retailer can "kill" that category for other
retailers. For few categories, such as electronics, the products are displayed at the
center of the store and sales person will be available to address customer queries
and give suggestions when required. Other retail format stores are forced to reduce
the prices if a category specialist retail store is present in the vicinity.
E-tailers: The customer can shop and order through internet and the
merchandise are dropped at the customer's doorstep. Here the retailers use drop
shipping technique. They accept the payment for the product but the customer
receives the product directly from the manufacturer or a wholesaler. This format is
ideal for customers who do not want to travel to retail stores and are interested in
home shopping. However it is important for the customer to be wary about
defective products and non-secure credit card transaction. Example: Amazon and
EBay.
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Vending Machines: This is an automated piece of equipment wherein
customers can drop in the money in machine and acquire the products. This kind of
system is currently not widely used in India. For example: Soft drinks vending.
Retailers can opt for a format as each provides different retail mix to its
customers based on their customer demographics, lifestyle and purchase behavior.
A good format will lend a hand to display products well and entice the target
customers to spawn sales. ( Thejeswini. G, 2010)
2.4 The Retail Theories
Retailers achieve their financial objectives by effectively managing their five
critical assets: locations, merchandise inventory, stores, employees, and customers.
Beside, retailing activities including many activities as specified follow:
1. Merchandise management involves
Managing the merchandise planning process
Buying merchandise
Retail pricing
Planning retail communication program
2. Store management involves
Managing the store
Store layout, design and visual merchandising
Customer services
In this study, I will only focus on the three theories that are most relevant to
the three factors that affect retail activities. That is location, merchandise inventory
and stores.
2.4.1 Central place theory
Retailing is a highly location-sensitive economic activity. Due to the nature
of the transactions carried out in various types and sizes of stores, they are likely to
be found in regional centers (urban cores) or in close proximity to such centers.
Where proximity to demand and being located within a retail cluster are crucially
important for an individual shop, the high rental costs in such places produce an
aversive impact. Where proximity to demand and being located within a retail
cluster are crucially important for an individual shop, the high rental costs in such
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places produce an aversive impact. We all know that stores with large establishment
sizes, which also often sell durables for less frequent purchase, are more likely to be
located further from the core of the retail cluster. Meanwhile, the retail cluster in the
urban core is more likely to be occupied by small-scale stores and/or downtown
shopping centers where several shops are nested together. Nevertheless, it is an
acknowledged fact that stores are not distributed across space randomly. One
important about spatial regularity in the retail industry is that many retail services
are likely to be located close to each other. This co-location phenomenon in
retailing is driven by consumers’ as well as suppliers’ desire to have a critical mass
of shops in a marketplace. Also, for a store, being located close to different and
similar kinds of retailing activities is necessary for survival due to
complementarities between the retailing services. (Johan P.Larsson & Özge Öner ,
2014).
Choosing a particular location type requires evaluating a series of trade-offs.
These trade-offs generally involve the size of the trade area, the occupancy cost of
the location, the pedestrian and vehicle customer traffic generated in association
with the location, the restrictions placed on store operations by the property
managers, and the convenience of the location for customers. The trade area is the
geographic area that encompasses most of the customers who would patronize a
specific retail site. (Michael Levy & Barton A.Weitz, 2011, pp.168).
Considering the focus of this study, the most relevant theories are the
‘central place theory’ of Christaller (1933) and its later extensions, which
specifically deal with retail location. In fact, the use of central place theory for retail
can be traced back in history in many countries with strong retail planning
traditions, like Sweden and the UK (Dawson, 1980; Sparks & Dawson, 1989).
According to the theory, the demand at any location is expressed roughly as the
number of consumers within a large area. This very basic idea of spatial demand
allows one to map a retail center by taking the surrounding geography into account.
The intuition behind the use of this theory for retail location investigation is that in
each location it is possible to describe a spatial dimension of consumer demand,
which attenuates as we move outwards from the location in question. Thus, the
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demand is not uniform but subject to distance decay. This decline in potential
demand with increasing distance is due to consumers’ decreasing willingness to
travel greater distances. This phenomenon is referred to as a spatial demand cone by
Lösch (1940), and Huff (1964) explicitly discusses the decreasing shopping
probabilities radiating outward from a center in his work.
Central place theory suggests that cities are connected in systems of cities
and that they are hierarchically ranked, a proposition that is extensively analyzed in
the rank–size literature. Large cities are likely to be closely linked to cities of a
smaller size, and they are also likely to influence the growth of the smaller places
connected to them. This type of hierarchical order that we observe for cities is in
fact very similar to the hierarchical order between different retail markets. By
dividing the trading areas into separate hierarchical circles of demand, Applebaum
and Kaylin (1974) distinguish between a primary area where the demand is at its
highest level, secondary areas where the demand is lower and a peripheral ring
where consumers have a tendency to shop elsewhere. (Johan P.Larsson & Özge
Öner, 2014).
2.4.2 Supply chain theory
Retailers are the connection between customers and product manufacturers.
It is the retailers’ responsibility to gauge customers’ wants and needs and work with
the other members of the supply chain—distributors, vendors, and transportation
companies—to make sure the merchandise those customers want is available when
they want it.
Supply chain management is a set of activities and techniques firms employ
to efficiently and effectively manage the flow of merchandise from the vendors to
the retailer’s customers. These activities ensure that the customers are able to
purchase merchandise in the desired quantities at a preferred location and
appropriate time. Retailers are increasingly taking a leadership role in managing
their supply chains. When retailers were predominantly small businesses, larger
manufacturers and distributors dictated when, where, and how merchandise was
delivered.
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But with the consolidation and emergence of large, international retail
chains, retailers now play an active role in coordinating supply chain management
activities. The size of these international retailers typically makes them more
knowledgeable and powerful than their vendors and thus better able to control their
supply chains. Retailers are in a unique position to collect information about
customer shopping behavior and purchases. This information is being shared with
suppliers to plan production, promotions, deliveries, assortments, and inventory
levels. Efficient supply chain management is important to retailers because it can
provide a strategic advantage that increases product availability and an inventory
turnover that produces a higher return on assets. (Micheal Levy & Barton A.Weitz,
2011)
In this conceptual, with the purpose of this study, we will look more deeply
into a concept named outsourcing logistics.
Outsourcing Logistics
To streamline their operations and make more productive use of their assets
and personnel, some retailers outsource supply chain functions. Many independent
companies are very efficient at performing individual activities or all the supply
chain activities. There are a large number of companies that can transport
merchandise from the vendor to distribution centers or from the centers to the
retailer’s stores. Rather than owning warehouses to store merchandise, retailers can
use public warehouses that are owned and operated by an independent company.
Rather than outsource specific activities, retailers can use freight forwarders
to arrange for the storage and shipping of their merchandise. Freight forwarders
usually provide a full range of services including tracking inland transportation,
preparing shipping and export documents, warehousing, booking cargo space,
negotiating freight charges, consolidating freight, insuring cargo, and filing
insurance claims. (Michael Levy & Barton A.Weitz, 2011)
2.4.3 Merchandise placement theory.
Some store design objectives are to (1) implement the retailer’s strategy, (2)
build loyalty by providing a rewarding shopping experience, (3) increase sales on a
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visit, (4) control costs, and (5) meet legal requirements. (Michael Levy & Barton
A.Weitz, 2011)
There are many different floor designs in grocery and department
stores today. Many of these designs are carried over from previous years, and have
nothing to do with how consumers shop. This is not just a U.S. phenomenon, as
many businesses in many countries set stores up with the same traffic pattern in
mind. These practices typically involve placing higher-frequency products near the
back of the store, with low-margin merchandise on the perimeter and higher margin
goods near the center. There is a science to some of this, but old methods seem to
prevail against science. There have been many studies carried out, predominantly
by the consumer packaged goods companies, on what shelves to put products on
(high shelf versus low shelf). One inherent problem is that these packaged goods
companies are responsible for only a small amount of merchandise in a store and
have little say regarding what counter the product sits on, only where it sits within
their small area. All store designs are intended to alter or force a particular
consumer traffic pattern within a store. The grocery store industry goes to great
lengths to set predetermined traffic patterns, all with the hope of building bigger
baskets. There are some newer specialty chains that have designed destination
departments within their stores (mobile phones, computers, appliances, and flat-
screen televisions). These departments are heavily signed as you come into the store
and guide the consumer to the area they are interested in. These stores are built on
service and cross selling, the art of selling other items related to the primary item
(for example, expensive cables that go with the flat screen TV).
Old Theories of Merchandise Placement
Some theories seem to live on forever. Many supermarkets even today will
put eggs, milk, and most dairy products in the location farthest from the front
entrance. The reasoning is simple: Make consumers past as much merchandise as
possible so they will pick up more stuff. Although this seems logical, it is not
always the case. This rule started (and was widely used) back in the 1940s and
1950s and has been used ever since. It was common back then to have single-
income households, so time was not as critical and limited a resource for the
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shopper as it is today. In the 1950s, shopping, even for groceries, was a pleasant
afternoon trip, not an exercise in time management. This was a family trip, with the
kids included. The grocers would plan the design of the store knowing that the
family would be spending time in each aisle. Products that occurred most frequently
on shopping lists would be placed near the back, with aisles designed to make you
wander the store. Retailers didn’t want shoppers to have a direct path to the items,
but forced them to go down certain aisles, just to remind them of other
products they may have left off their shopping lists. This method worked well, and
is still being used today in many locations. The longer you stay in the store, the
better the chance you will pick up those items you didn’t intend to buy when you
came in. These are not necessarily impulse items, but could be additional dinner
side dishes, a new type of pasta, or an end-cap special promotion.
New Theories of Merchandise Placement
In the mid-1990s and early 2000s, many research firms posted studies about
the ever-shrinking hour. The emphasis everywhere was on time management, with
the ever-increasing trend toward dual-income families. Shopping began to be a
necessity, not an enjoyable pastime. Retail organizations began to develop stores
with smaller footprints, where the selection was smaller but the emphasis was
on convenience. Neighborhood markets were being opened up wherever space was
available. Gas stations added food to the line of goods sold along with cigarettes in
their now increasing C-channel (convenience store) locations. These new channels
were big moneymakers, taking sales and margin from grocery stores and mass
merchandisers alike. Again, the new designs were based on the time pressures these
new families were under, convenience was the goal, and consumers were willing to
pay more for this, hence the term time value of time.(Emmett Cox, 2012)
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Chapter 3 Fact of retail activities of HBE
3.1 Overview of HBE
3.1.1 Establishment and development of HBE
Overview of HBE
Name: HATINH EQUIPMENT BOOK AND EDUCATION JOINT STOCK
COMPANY
§ Abbreviation: HTBEEC0
§ Stock Code: HBE
§ Head Office: 58 Phan Dinh Phung Street, Ha Tinh city, Hatinh Province
§ Phone: 0393. 893 399
§ Fax: 0393. 852 352
Scope of business:
Selling education books, textbooks, journals, maps, writing paper, all
kinds of VPP and publications
Producing Joint Venture types of school equipment; printing documents,
records, books and serving the education sector
Buying, selling and consigning goods, commercial brokerage;
Travel, restaurants, refreshment.
Joint training, professional training in the fields of library, school
equipment, Business Administration, Finance and Accounting, Computer Science;
Foreign Languages
Training Professional Director; Provide legal advices in the areas: labor
safety, service tax; Vocational and technical composite
Real estate office; consulting study.
School services.
The History of Establishment
The predecessor of the company HTBEECO Books - Ha Tinh School was
established in November 1991 under the state enterprise model, under the
Department of Education - Training in Ha Tinh province.
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On 11/12/2004 : Company moved from state enterprise model into a joint
stock company under certificate of business registration of joint stock company
number 2803000151 issued by the Department of Planning and Investment of Ha
Tinh, first registration date November 12, 2004 . The company moved into the
enterprise directly under the People's Committee of Ha Tinh province with an initial
charter capital of VND 1.25 billion.
In 2005, the charter capital increased to VND 2,250,000,000. In 2006, the
charter capital increased to VND 6,000,000,000. In 2008, the charter capital went
up to VND 10,000,000,000. And by 2010, which is VND 22.31058 billion charter
contract. (Source: HBE’s financial statement, 2010)
Listed shares in the Securities Trading Center in Hanoi on 22/02/2008.
Development Strategy
The main objective of the company: Developing with stable growth rate,
doing business effectively by increasing profitability and economic benefits for
investors, creating jobs and maintaining income of workers, perform better tax
policy for the state. (Source: HBE’s Website http://hbec.com.vn/hbec/vi/)
Subsidiaries
HBE Educational Co., Ltd. established on 05/06/2012 with charter capital
of VND 13.5 billion by the parent company holds 100% of the charter capital.
HBE Trade Co., Ltd. established on 11.13.2012 with charter capital of 4.5
billion contracts with the parent company holding 100% of the charter capital.
HBE Aggregate Distribution Co., Ltd. founded on 03/01/2013 4.35 billion
contract with a charter capital; in which, the Company undertakes to contribute
2.784 billion dollars east, respectively 64% rate of capital. The company was
dissolved on 09/30/2013.
(Source: HBE’s financial statement, 2013)
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HBE
General Meeting
of Shareholders
Board of
Management
Board of
Directors
General
Director
Deputy
General
Director
Accounting
department
Business
planning
department
Organized and
administrative
department
Legal
department
Retailing
department
Supervisory
Board
Table 1: HBE’s organization structure
Source: HBE’s Database
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3.1.2 Organizational structure of HBE
The management structure of Company
§ General Meeting of Shareholders: Including all shareholders with voting
rights, is the highest authority of the company and decide the issues in term of law
and charter provisions. Specifically, the shareholders will approve the annual
financial statements of the Company and the financial budget for next year.
§ Board of Management: The management agencies which have full
authority to represent the company to decide all matters relating to the purposes and
interests of the Company, except for those matters within the competence of the
General Assembly Shareholder. Board of Directors is responsible for supervising
the CEO and other managers. The rights and obligations of the Board of Directors
are regulated by law and charter, the internal regulations of the Company and the
Shareholders' Meeting Resolution Provisions.
§ Supervisory Board: The agency under the Shareholders' General Meeting
which is elected by General Meeting of Shareholders. Supervisory Board is
responsible for checking the reasonableness and legality of business operations,
financial statements of the Company. Supervisory Board operates independently to
the Board of Management and the Board of Directors.
§ Board of Directors
1 - General Director
General Director is the legal representative of the Company in conducting all
business activities. General Director are appointed and dismissed by the Board of
Management and he/she is not necessarily a member of shareholders and could be
the member of Board of Management. General Director is responsible to the Board
of Management and the law in term of Business Operation Effective.
2 - Deputy General Director
The Deputy General Director has missions to assist the General Director in
term of activities in areas as assigned and authorized by the General Director and
responsible to the General Director and the law in assigned and authorize tasks.
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§ Advice Block: Including the departments, unit members, and the board
which has the function of advising and assisting the Board of Directors, directly
operating expertise and functional direction of the Board of Directors. Advice Block
of the Company consists of department, the unit member function is specified as
follows:
1 - Business Planning Department:
Business Planning Division has the following functions:
Organizing business plans under the categories of business of the Company
Planning to Supply materials for Equipment education and Toys
manufacture.
Giving guidelines at selling commodities of Trading Company and General
Services.
Organizing joint trainings
Collecting Debts
2 – Accounting Department
Accounting Department has functions to implement the company’s financial
regulations and account proactive capital supply -demand business plan aimed at
developing production and building infrastructure for the company.
Chief Accountant has duty to assist the General Director in term of directing
and organizing the implementation of accounting and finance of the Company
under the provisions of law.
3 - Organized and Administrative Department
Organized and administrative department shall assist the Company’s leaders
and its affiliated entities in term of the management staff, the administrative work.
In addition, the department's function is to make car rental services while operating
freight cars and ensure the best facilities to the Company. The department
cooperating with Department of Accounting managing company’s assets and
Appraising shopping facilities.
4 – Legal Department
Legal department shall assist the Company’s leaders and its affiliated entities
in term of the legal advices and the legal work.
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(Source: HBE’s Website http://hbec.com.vn/hbec/vi/)
5 – Retailing department
Retailing department has the following functions:
Controlling retail activities of HBE.
Organizing market exploration and customer care.
Selling goods and commodity of HBE at the retail outlet.
3.1.3 Financial situation of HBE
Finance always plays an important role to corporation. In fact, the weak
points of Vietnamese retailers in general as well as HBE is the capital and business
strategies usually only up for a short-term.
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The business activities result of HBE from 2010-2013
Table 2: Revenue of HBE from 2010 – 2013(VND 10 BILLION)
2010 2011 2012 2013
Q1 3,08 4,01 3,81 4,50
Q2 13,31 14,01 18,95 7,78
Q3 20,27 26,01 23,74 17,65
Q4 10,77 10,37 10,27 9,04
Total 47,43 54,4 56,77 38,97
(Source: HBE’s Financial Statement 2010-2013)
Chart 1: Revenue growth of HBE from 2010 - 2013
From 2010 to 2013, the overall trend of revenue is increasing. In 2010, the total
revenue is VND 470,43 billion and the year later it increase to VND 540,4 billion in
2011 and went up to VND 560,77 billion in 2012. Within 2 years the revenue had
been increased nearly VND 100 billion. But in 2013, there is a huge deficit, the
revenue had fall dramatically to VND 380,97 billion.
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Table 4: Asset of HBE from 2010-2013
Asset (VND1000) 2010 2011 2012 2013
Total Short-term liquid asset 17,603,935 15,022,056 13,411,030 3,010,985
Total asset 42,318,042 39,252,891 36,074,955 26,315,031
Short-term debt 12,083,904 12,020,350 8,837,408 2,857,856
Total Debt 18,254,180 14,687,577 12,112,408 2,857,856
Owners’ capital 24,063,862 24,565,314 23,962,548 23,457,175
(Source: Financial statement of HBE 2010-2013)
As you can see, HBE own small capital and do not increase much over the
year, in order to operate business, the company must mobilize capital from outside’
sources. The mainly sources is the commercial bank, development fund and credit
association.
Overall, the short-term liquid asset has tendency to fall from the year 2010 to
2013. In 2010, the short-term liquid asset is nearly VND 17, 6 billion and by 2013 it
decreases more than VND 14 billion, which is about VND 3 billion. It would mean
that company has spending more and more money on the short-term over 4 year.
And the total asset of company had happened to exactly the same trend. The total
asset of HBE had been fall out up to 38% within three years, from VND 42,3 billion
in 2010 to VND 26,3 billion. Why is there a VND 16 billion deficit in the total
amount of asset within three years? It could because the company had spent more
assets in paying the debt over the year. Just look at the table how the total debt had
been decreased.
25. 25
Noticeable, the owners’ capital had remained nearly unchanged over this
period of time, which is around VND 24 billion. Thus, despite the company has
spending more money, the owners did not seem to earn much wealth though.
A good new that comes from the table is that the debt of company has
dramatically decreased in 4 year. From about VND 18, 2 billion in 2010 falling to
just about VND 2,8 billion in 2013, which is more than VND 15 billion.
We can say that the financial resources are a key measure to assess the
competitiveness of an enterprise. Especially in the field of retail distribution, the
economic efficiency of scale is quite clear, the potential of finance play a decisive
role in the business strategies of enterprises. To better understand why you need to
improve financial capability, let’s take a look.
Financial capability enables enterprises to reduce the purchase price.
Therefore, when a company has great financial potential, it's usually means that
have large distribution systems respectively. At purchase contract with the
manufacturer, they will sign the contract at the same time for all the primary basis
of their distribution, rather than buying each individual facility. This helps to
increase the order value, so that retail business is easy negotiating with partners to
increase production over sales discounts, or decrease in other costs that the retailer
must pay the manufacturer.
3.1.4 Significant achievements of HBE
Since its establishment, especially after converting into a joint stock
company, HBE has achieved steady growth, becoming the main provider of books,
and equipment in the province of Ha Tinh and some central provinces nearby.
Along with a high demand for books, school equipment, children's toys, wide field
of activities of the Company will be increasingly affirmed and occupies an
important position.
The company went on Securities Trading Center in Hanoi on 22/02/2008
which marked a very important point in the road of development. So far, by 2010,
the charter capital was VND 22.31058 billion.
At the moment, the company creates jobs for 56 staffs, which contribute a
wide amount of jobs to the labor market. (Source: HBE’s database)
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3.2 Overview of Vietnam Retail Market
3.2.1 Vietnam’s Retail Industry and the Cases from Giant Retail Brands
Vietnam retail value sales slowed down in 2012 due to unstable state of
Vietnam’s economy, including the country's high inflation rate and interest rate.
Based on AT Kearney’s Global Retail Development Index (GRDI), Vietnam
retailing ranked in sixth place in 2009 but dropped to 14th in 2010 and 23rd place in
2011. By the end of 2012, it was not listed in the top 30 most attractive retail
countries in the world. Despite of this, Vietnam retail value sales still shows double
digit growth due to rapid urbanization, relatively large young population and
increasing middle income population.
Despite the fact that Vietnam's economy has had a significant downturn in
growth within the past two years the retail market continues to attract global and
regional players. In addition to Big C and Metro C&C who have been ever present
within Vietnam over the past number of years, there are several others who have
attempted to strengthen their presence or attempted to penetrate the modern trade
sector which accounts for just 20% of the whole market at this point in time.
Different operators from various segments: shopping malls, grocery retailers and
supermarkets, and convenient stores have been continuously working to attain new
market share. Existing operators such as Parkson, Lotte Mart, Family Mart, and
Circle K are competing with newcomers such as Aeon, E-Mart, NTUC Fairprice.
Vietnam was ranked as one of the top emerging markets for retail in 2008-
2009 but since then its rankings have continued to fall as the Vietnamese economy
has not performed as well and or with the same stability as others. There are several
reasons for that downturn in retail but it cannot be denied that the potential is great
and is still very much exists. An ever increasing demand of consumer goods and
rising disposable incomes will drive potential growth in a 90-million-population
economy. (Source: General Stastic Office, 2012). Also, rising urbanization and
expanding rural retail area promoted by improved infrastructure will be facilitating
such growth. Within the past few years, market players have been increasing their
presence in Vietnam. The number of modern stores, supermarkets, and shopping
malls has increased tremendously. So has the number of foreign brands been
27. 27
penetrating into the market. Market volume is estimated at US$ 123.8 billion by end
of 2013. (Ha Thi Hong Nguyen, Steve Wood & Neil Wrigley.2013)
That’s the reason why, despite falling out of the Top 30 attractive retail
markets in the world two years ago, but with 90 million people, Vietnam has proved
attractive to foreign investors. In recent years, foreign investors are always the most
exciting areas in the retail sector. In Ho Chi Minh City, Parkson has invested $ 8
million to open shopping center in Vietnam its 9th called Parkson Cantavil. This is
considered a string of high -level commercial center with the largest number in the
country today.
The older retailers in Vietnam as Big C, Metro ... Big C state that “no restrict
on selling place as long as there is space." French giants are gradually expanding
into the rural market, after contemplating the big city is about to become saturated.
Not only the enterprise specialized in retail expand system, the famous
companies in the field of real estate and industrial also investment in supermarkets.
Son Ha Group supermarket chain founded Hiway. Vingroup also engaged in the
retail market by development plan of VingKC nationwide chain. Alphanam Group
will also participate in the market in 2014 with 79 Mart supermarket chain.
Ocean Retail - Group of Ocean (Ocean Group) joined the market in 2013,
after the hypermarket opened in Royal City and Times, has announced it will launch
added a commercial center and a super- market in two districts of Hanoi.
Meanwhile, a supermarket with the same brand also prepares to go into operation in
early 2014 in Ha Tinh.
Saigon Co-op, the largest supermarket chain in Vietnam, in 2013 announced
that along with NTUC FairPrice Singapore opened two supermarket chains which
are Xtra Co-op and Co-op XtraPlus. It is expected that the number of supermarkets
will continue to increase sharply in 2014. In particular, Saigon Co-op specifies the
strategic North when opening 2 more stores in Hoang Mai district with an
investment of over 110 billion. (Trang Lam, 2014)
During the period – one where Vietnam entered the WTO in 2007 – several
new investors entered the market, namely Metro, PCSC, Dairy Farm, Lotte,
Couche-Tard, SPAR and FamilyMart. Two groups 15 of multinational retailers
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undertook FDI in the Vietnamese retail market: first tier, rapidly globalising leading
retail TNCs such as Casino, Metro Group, Couche-Tard as well as second tier
regional retailers including Dairy Farm, Lotte, PCSC, Seiyu, and FamilyMart. The
rapid diffusion of retail TNCs was mainly through hyper/supermarket formats and,
more recently, convenience store formats.
Notably Metro Group has developed its Cash & Carry business since its
entry in 2002, growing store numbers to 13 by 2010 with total sales of US$552m
(IGD, 2011). It has also made a concerted effort to embed itself within the
Vietnamese market through its ‘Made in Vietnam’ programme that promotes
Vietnamese sourced products and involves co-operation with local authorities to
support agriculture (IGD, 2011; cf. Coe and Hess, 2005). Meanwhile, Casino’s Big
C portfolio has expanded through the acquisition of a controlling stake in the
Vindemia/ Groupe Bourbon joint venture in 2005 to control a portfolio of 11
hypermarkets by the end of 2010, which generate sales of US$236m (IGD, 2011).
In order to protect domestically owned supermarkets, the government of
Vietnam did not historically encourage 100% foreign-owned investment in the retail
industry. However, the regulations of foreign and domestic enterprises were
significantly modified after July 1st 2006, when the Foreign Investment Law and
Domestic Enterprise Law were replaced by the Unified Investment Law. Since then,
foreign investors can invest in any area not prohibited, instead of merely areas
allowed by state agencies. This principle has been applied to the domestic private
sector since 2000 and to foreign investment from 2006. Moreover, in accordance
with the country’s commitments to regional and international integration namely:
ASEAN Free Trade Area (AFTA), WTO, Vietnam-US Bilateral Trade Agreement
and the Japan-Vietnam Investment Agreement, the retail market gradually opened
to foreign investors. The permitted foreign capital share was raised to 50% in 2008,
while, from 2009, Vietnam allowed 100% foreign owned retailers to operate within
its borders (under the pre-2009 regulations, the foreign partner could only hold up
to 49% of capital).
Throughout the ‘transition’ and into the ‘globalization’ periods, Vietnamese
domestic retailers attempted to firm-up their competitive position prior to TNC
29. 29
entry when de-regulation loosened the restrictions on expansion. These domestic
retailers not only focused on developing the supermarket format, but also cultivated
new formats such as:
The supermarket, trade center and Domestic retailers such as Maximart; Co-
op Mart developed this format that was subsequently developed by retail TNCs
through some Lotte stores in 2008, 2011 and a selection of Big C stores in 2009,
2010, 2011.
The convenience store format has been developed in the Vietnamese retail
market both by domestic small store operators and by multi-format retailers,
typically those that specialize in supermarket retailing. Domestic supermarket
specialists that have developed c-stores include Hapro, Citimart and Saigon Co-op.
Meanwhile convenience store specialists include both domestic and foreign
retailers. At times, these small stores have been located at petrol filling stations
(such as Day & Night convenience stores, owned by Phu An Thinh Company).
Frequently the development of the convenience store within Vietnam stemmed from
upgrading the small domestic independent operators and consolidating them into a
larger and centralized retail operation. For example, Hoang Corporation introduced
two approaches to convenience store development: Firstly, upgrading the existing
traditional family-owned store into standard 24Seven store with all-in support from
design, layout to sales training. Secondly, via a BOT (Build-Operate-Transfer)
contract; an all-in franchise whereby the owner could operate without the concerns
of store establishment and goods supply.
By far the largest convenience store operator was G7Mart, founded by the
owners of Trung Nguyen Coffee Company, which set about ‘upgrading’ existing
grocery stores. G7 trained the owners/sellers, in the process applying information
technology to coordinate the store systems and standardized the store signage
(Saigon Times, no date). The units were then re-branded either G7Mart or as a G7
member store. Clearly, G7 Mart capitalized on the existing customer bases of ‘mom
and pop’ stores but gained from better in-store standards, product ranges and
service levels. By August 2006, G7 had opened 500 G7marts, 9,500 G7 member
stores and 70 wholesale distribution centers. However, consumer acceptance of the
30. 30
retail format and recognition of the retail brand was mixed – an issue exacerbated
by the separation of G7mart from its parent company, Coffee Trung Nguyen
Company. Consequently, many of the independent operators suspended their
contracts with G7 Company and returned to independent status in 2008. (Ha Thi
Hong Nguyen, Steve Wood & Neil Wrigley.2013)
3.2.2 The Situation of Book and Equipment Retail Market in Vietnam
Books, equipment and supplies Market for training is still very wide.
According to the International Monetary Fund (IMF), income per capita in Vietnam
improve each year; in 2013 was USD 1704 , increasing 12% compared with
2012.(Source : World Economic Outlook Database, April 2013).(For a countries
with young populations such as Vietnam, expected demand for educational products
and books the equipment for training is very large. These are factors that facilitate
potential develop in business and production activities of educational products and
high feasibility in the implementation of the business plan of the sector in the
coming years.
Like clothing shops, while some bookstores in Vietnam are scattered along
streets and even leave no trace down narrow alleys, other shops are close together
on some streets so-called book streets such as Dinh Le Street, Trang Tien Street,
Lang Street in Hanoi and Tran Huy Lieu Street in Ho Chi Minh City. Other shops
are located in shopping centers and in areas surrounding schools, universities and
research institutes.
Interestingly, pavements are the ideal places for unsettled bookshops to
display their books spaciously and sell them with highest discount rates, ranging
from 30% to 50% off the publisher’s recommended retail price.
In bookstores, you do not have to waste your time bargaining as books are
sold at their retail prices and sometimes discounts are available for those who buy in
large quantity or for frequent customers only.
Academic year 2013 - 2014, in order to meet market demand, the
manufacturers and the issuance of school equipment and books , school supplies has
launched several new products which is rich and diverse in form codes and
categories but prices remain relatively stable . Instead of choosing a small retail
31. 31
stores sold the product of books, notebooks, school supplies for their children as the
year before, the first destination of many parents this year is the supermarkets,
bookstores, bookstore systems. In addition to ensuring product quality, clear origin,
supermarkets, bookstores were associated with the manufacturers to offer discounts.
This year the number of items in learning services of Vietnamese brands in
supermarkets, bookstores accounted for about 70-85 %. The previous year,
consumers often preferred the products with nice designs, low price. This criteria is
easily found in the products of Chinese origin as pens, pencils, wax, animal shaped
erasers, rulers ... Although no studies have pointed out the real school supplies
products by Chinese manufacturer harmful to the user but more recent information
Chinese products containing toxic additives, does not guarantee safety for many
users appear to most people consumers tend to choose domestic products.
The brand has been gained the market 's trust in paper notebooks is Hong Ha
, Hai Tien , Tien Thanh , Vinh Tien ; Thien Long Pen , Ben Nghe and the type of
book bags , backpacks produced by Vietnam . Notebook type 72 pages - 96 pages
from VND 3500-7500 at the same price / book ; type 120 pages VND 6000-15000
copper price / book ; type 200 pages VND 12000-16000 copper price / quality
notebooks and paper manufacturers. In addition to the advantages bright white
paper, white paper various types of inorganic natural anti -glare, eye strain, the price
difference is about VND 500/ book. Pens can vary in price VND15000-70000 /
medal ; ballpoint pen types priced from VND 2000-7000/unit ; pencil, crayon from
VND 3000-10000 unit; Text boxes cost VND 5000-35000/medal depending on type
(plastic, cloth or tin). The type of backpack, briefcase Vietnamese brands like Ming
Tien, Ladoda, Hami ... were put on the market with a sleek, durable and popular.
The advantage of this product is light; the strap can be moved back and look under
the age of each user, angled scratch ... with prices ranging from 200-550 thousand
VND / unit. Although the price of this product increased 10-15 % compared to last
year but still a lot of people choose to buy. This year, many kinds of school supplies
for students appearing fancy designs as backpacks, notebooks, rulers, pencil case...
are printed animals, cartoon characters with funny colorful collection were thronged
with customers chatter. Other products such as table lamps, lamp against myopia,
32. 32
student desks, pocket PC ... Vietnamese brands are also sold with many designs,
colors and quality not inferior to imported goods.
In the case in this report Ha Tinh province has a lot of schools: 340
elementary schools, 200 junior high schools, 45 secondary schools and the
University of Ha Tinh.(Source : HBE’s website http://hbec.com.vn/hbec/).
Therefore, the demand for school equipment and toys are great. Moreover,
the company is the main producer, supplier and distributor of school equipment and
children's toys in the province and neighboring provinces. Currently, the Company's
products produced are consumed virtually entire products. In the future, the
increasing demand of the market is a promising development for the Company.
3.3 The Situation Analysis of Retail Activities in HBE
3.3.1 Infrastructure
One of the most important factors of retail industry is the retail place. The
suitable place is the very first criteria which bring the strength to retail brand. Other
factors such as product, price comes after.
Every retail enterprise or trade has its own criteria. For example, a donut
shop needs in a convenient way on the way to work. On the other hand, wine shop
is located on the side of the road under the way home from work place.
The choice of location has a huge impact to chances of success.
In this report’s case, HBE’s stores locate on the main street, in the center part
of the city which covers a geographical area of market to share the cost savings and
product distribution. Company has two store account for more than 1000 square
meter placed at 58 Phan Dinh Phung street, the main street in Ha Tinh City.
On the first floor, there is many education services stuff and Vietnamese-
English dictionaries, great section in Vietnamese on history, culture, and political.
On upstairs is the best selection of French and English children's books - lots of
education services materials, school facilities such as chairs, table... Etc. On the top
floor they have office supplies, gift section, toys, and various other random things.
Due to its daily activity, this place draws many people and employees into
the area during business hours. The place is also the hub for public transportation,
and there is a high level of pedestrian traffic. In addition, it has a large number of
33. 33
residents living in the area, passersby are crowd which is convenient for the retail
place, but also where there are high land rents. Moreover, limited parking and
longer driving times can discourage suburban shoppers from patronizing stores in
this place. Shopping flow in the evening and on weekends is a little also slow in this
place. Shoplifting is also a concern, requiring increased security costs and/or
inventory losses.
To select the appropriate location, HBE used different methods for assessing
the statistical location as vehicle traffic through the investigation of the shopping
habits of consumers, the local analysis competition points.
HBE usually evaluate sales performance of a particular store by the criteria:
the number of people who go through the store in a day average, the proportion of
people in the store passing of the stores, proportion of persons in the total number of
people shopping in the store, the average amount spent for the purchase of a
customer.
One can shop for weakness lies in the unfavorable position, or at least bear
had passersby into the store or more people into the store just to surf rather than
buy, or not buying many goods. All these problems could be overcome.
In HBE, Traffic density problems are solved by choosing more appropriate
location; number of people in the store raised by more attractive advertising and
display rows in a beautiful glass counters to attract attention and customer interest,
and some shoppers and purchases primarily a matter of quality, product pricing and
sales of art.
3.3.2 Human resources
There are eight people take part in the managing process of HBE. Most of
them do not have qualification that suit the business of company. And in this kind
of dynamic business sector, some of them are really old for the job, could not stand
the change. (See more at appendices).
And along with these leaders are nearly 56 workers, most of them are related
with these leaders, together contribute and develop company. (Source: HBE’s
database)
34. 34
According to Mr. Bao Ho Gia (General Director of HBE) and Mr. Toai
Nguyen Thai (Manager of Organized and Administrative Department) at the
moment, in HBE, the situation of human resource in staff could be summarized as
below:
- Lack of professional in working, being late and lazy at work
- Lack of confidence in communication led to the lack of present ability,
influence and persuasion;
- Lack of creativity, passive thinking leading to difficulties when cope with
situations need to take proactive measures;
- Lack of ability to control emotions, especially when they are put into
solving situations with difficult customers or the conflict of interests;
- English proficiency is not met the basic requirements to serve foreign
customers at the counter;
On the other hand, the leaders are not very well training at management skill
as well as specialized. (See more at appendices). Not much man being unable to
take high pressure from work because of the age. They are a little too old for the
job. To be honest, it is very hard to find out a man who is well trained in term of
retail management major, mostly doing business based on experience and intuition,
do not own any long-term strategy. In addition, the high position is rarely delegate
any important mission to their staff, they like to do it on their own because in their
mind, no one can do it better than them, consequently, the staff are not received
many chances to develop. And moreover, company does not pay much attention at
human resource training activities.
They are only good at adaptation under the dynamic change of the market,
able to meet the trend of customer demand.
Developing retail market requires certain conditions: extensive networks,
fixed costs (retail location, infrastructure investment) large, professional workforce
suitable for retail properties. In three major conditions mentioned above, the first
two conditions can quickly establish if there are sufficient material resources.
However, the third condition is not easily created by them related to human factors -
the most important factor in the process of reform and development. Best human
35. 35
resource not only master all these networks, the technology but also is the decisive
factor improvement network, technology, processes ... and what is more important
is to create and maintain sustainable relationships with customers
3.3.3 Logistic System
HBE do self- made logistics services which means that company take care
from A to Z, from the stage of warehousing, freight to distribution centers or retail
stores. Company own two large trucks to do the goods transportation on the end of
each month, and they store the inventory in the warehouse where is wide about 50
square meters in backward of the two stores. There are two drivers, whenever
needed they bring new product from the manufacture replacing the old inventory as
well as supply the deficit amount of goods. The manufacture placed at Hoang Ha,
Tan Trung Village, Thach Trung, Ha Tinh City, Ha Tinh Province, about 15
kilometer far from the store, which take about 20 minutes for driving.
Companies do self-made logistics services is a huge obstacle to competition,
resource waste and inefficiency. Because companies have spent large sums of
money, usually borrowed to invest in systems infrastructure, technical facilities like
cargo warehousing, loading and unloading equipment, transportation, human
resources management ... at that time, in addition to financial pressures, apparatus
bulge, company also most at risk, if the waste of storage capacity, means not being
fully exploited, or are stuck in a row in several stages. Thus, self- service logistics
enterprises only fit the huge hypermarket chains internationally.
Logistics system of HBE as warehouse storage, specialized vans
asynchronous, not qualified under state regulations. In addition, system protection
and management of goods are not absolutely safe
Efficient supply chain management provides two benefits to retailers and
their customers: (1) fewer stock outs and (2) tailored assortments. These benefits
translate into greater sales, lower costs, higher inventory turnover, and lower
markdowns for retailers.
Logistics, as Peter F. Drucker, the father of modern school management
industry, has predicted “Logistics is the driving force for innovation and new
opportunities that we have not touched. It was “hidden shelf “of the economy.”
36. 36
Logistics today solve three simultaneous flow of important and crucial that
the world economy is the flow of material, financial flows (capital) and information
flow. If there is an effective solution and the most effective for three flow control on
the business as well as in each country, this is logistics flow that the ultimate goal is
to help people save resources , and resources enjoyment right time, right place ,
right cost , quality and price.
The challenge remains the largest global logistics is a blockage of these three
flows. Where we have found that the material is still distribution gap, where full
inventory, where the lack of resources, high logistics costs and poverty, and meet
customer satisfaction remains a gap!
Besides, the coordination of the delivery vehicle type, right place, and
right time still operates quite simple. This does not only affect the business but also
increase labor costs as well as management.
3.4. Evaluate the situation of retail activities of HBE
3.4.1 Strengths
The company has always focused on exploration and creative ways to
develop; taking advantage available is Vietnam's retail market development
potential. Company knows to invest in important factors such as human and trade
promotion. The advertising activities, promotion ...Vietnamese style initially be
used effectively.
Having the ability to update information quickly, understand consumer
tastes, easily adapt to business environment and react promptly against market
fluctuations. The retailer is in direct contact with the consumer, have the
opportunity to closely understand the needs and cultural traits, traditions and
mentality of each customer segment.
3.4.2 Weakness
Financial capacity of HBE still weak. Scale low amount of capital, the
ability to access loans from banks Trade and other financial institutions also very
difficult. This makes enterprise scalability limited scale of operations, the first
investment projects, advertising campaigns, market research ...
37. 37
Logistics system is very weak, did not meet the requirements. From system
trucks, warehouses, storage methods to protect systems and cargo management are
outdated, not competitive enough. This can easily lead to shortages as demand rises
and not preserved when excess merchandise.
Work style is still unprofessional, qualifications of leaders is limited, lack
business management skills, lack of knowledge and practical experience.
Scientific technical and technology is low. Use of equipment, old
technology, and means of payment is outdated, making it difficult for shoppers. The
ability to apply information technology in business processes is still very limited.
38. 38
Chapter 4 Recommendations for developing retail activities in HBE
4.1 Corporate with other local retailers in order to improve financial capability
and logistic systems
In the business situation of Vietnam at present, namely the majority of small,
sporadic and disjointed business, only a handful of now regarded as " big" as the
domestic retail Saigon Co-op, Phu Thai, Satra ,Hapro ... but only has low financial
compared with the set Foreign retail groups like corporations in Vietnam Metro
Cash & Carry, Big C ,Parkson .... , the association is an inevitable trend if local
retailers to survive and development in their home market. Because there is
currently no common definition of what about legal issues links between
businesses, the division of the form of association are also many different ways, so
in this section I will only raise a number of effective ways of association which is
capable of high practical applications in the current circumstances of HBE.
There are many forms and levels of various cooperate, from one section to
full associate. To achieve economic efficiency from the association, the joint
companies should at least link the point of purchase, which means companies
general will agree to buy goods together. Doing this will increase the number of
units traded goods in one order, and thus easier proposed increase in the discount or
rebate related costs from the producers, through which the retailer in the
collaboration can reduce purchase costs, create competitive advantage when
compared with others .
This form is quite easily done as it does not require too much from retailers.
However, in order to achieve greater discount or related costs requires linkages
must also be large enough to some extent that is enough to cause the producer
accept the offer.
The next form of cooperation is in which retailers can make the link in
transport logistics, storage and distribution of goods from the warehouse to the
retail store. If retailers only link in the point of purchase, the purchase of goods
39. 39
arriving gathered, owners will automatically transfer their goods through the
warehouse the various transport services. But in this form of association, cargo will
be transferred to the general gathering of unified storage, and transportation services
from where the goods to the warehouse, from warehouse to distribution facilities
will be agreed to use the same logistics system. All activities will take place such as
a large retail enterprise storage and transport rather than separated out various as
other small retailers. As well as common purchases, links in logistical help to the
members minimizing cost quite a lot compared to when there is no link.
There's also a few other forms of association like affiliate support stitched
together in sales, affiliate promotion activities , links in the search for market
information ... all for the purpose of minimizing costs for members and creating
linkages are the positive effects greater retail distribution operations .
4.2 Enhancing Customer Service
Attracting new customers is difficult, retention of old customers, making
them became patrons even more difficult. Meanwhile, patrons bring 60-70% of
revenue for the retail store. Therefore, HBE need to pay attention to these measures
build trust and retain its customers.
The customer back regularly shop at a store or a supermarket is for any
reason? That is because they feel satisfied when buying and shopping there. So the
art to retain customers is to give them comfort when they are shopping.
In situation of retail in Vietnam today, the price competition with foreign
retailers are notoriously difficult for internal retailers. Therefore, instead of trying to
entice customers by offering lower price, the retailers should follow trends make an
impression by serving customers more professionally.
In order to improve the quality service, the first thing that the retailers need
to do is to improve the capacity of the serving staff. A retail store have good
customer service is the place where customers feel respected, feel comfortable
while shopping. The sales staff, billing staff, the direct contact with customers
should have a friendly attitude, welcome customers. Moreover, a salesman not only
know divestiture unloading cargo or sale to consumers , but also need to understand
40. 40
the goods to be able to help, advise customers when interrogated . Moreover, the
staff needs to be proactive asked to advise clients.
Service attitude towards customers is also manifested in term of
management of treat customers like, especially when the service receives the
complaint from consumers. In the modern retail stores today, being complained,
complaints from shoppers are not infrequent. Of course, the cause of the
malfunction is not always from the retailers; even when it was due to reckless or
understand know of the consumer. However, a good manager, a thing act wisely
will always seek to resolve issues quickly and to satisfy the customer. Based on the
experience of the manager’s reputation, once there incident occurred complaints,
should quickly analyze the causes and offer solutions appropriate. In case of error
from the consumer or from any third party, should be explained clearly with
customers and quickly take measures to compensate satisfactorily. Shouldn’t for
that little bit of profit to offend customers, so as not to prolong the matter resolved
because that will make thing worse.
One thing that managers should keep in mind, a when customers are
dissatisfied with a retail store, they will not return it again, and they will continue to
complain to those around when given the chance.
In addition, retail quality service is also built through the development
modern payment system, fast; or the supply of quality products good quality; the
convenience store layout and eye-catching.
4.3 Creating an appealing store atmosphere
The environment in a store, the design of the store & the presentation and
location of merchandise in the store has a significant impact on shopping behavior.
The design of a store or Web site can attract customers to visit the location, increase
the time they spend in the store or at the site, and increase the amount of
merchandise they purchase. Store design can also have long-term effects on
building customer loyalty toward the retailer by enhancing the retailer’s brand
image and providing rewarding shopping experiences that encourage repeat visits.
41. 41
There are six factors that can creating an appealing atmosphere, which I
think it can be apply easily in order to improve retail activities in HBE. That is
lighting, highlighting merchandise, color, music, scent and energy efficient-lighting.
4.3.1 Lighting
Good lighting in a store involves more than simply illuminating space.
Lighting can highlight merchandise, sculpt space, and capture a mood or feeling
that enhances the store’s image. Retailers are exploring ways to save energy with
technologically advanced lighting. Having the appropriate lighting has been shown
to positively influence customer shopping behavior.
4.3.2 Highlighting Merchandise
A good lighting system helps create a sense of excitement in the store. At the
same time, lighting must provide an accurate color rendition of the merchandise.
For instance, Walmart has been putting skylights into the roofs of its stores. This
addition cuts energy costs and creates more natural light, which is excellent for
hardware and home goods. However, it is best to use artificial light for apparel so
that customers can clearly see details.
Another key use of lighting is called popping the merchandise —focusing
spotlights on special feature areas and items. Using lighting to focus on strategic
pockets of merchandise trains shoppers’ eyes on the merchandise and draws
customers Pike Place Fish Markets’ employees play a major role in creating an
entertaining and rewarding shopping experience. Strategically through the store,
Nike, for example, uses a lot of contrast and shadows, highlighting the merchandise
but not necessarily the architecture. Mood Creation Traditionally, U.S. specialty and
department stores have employed incandescent lighting sources to promote a warm
and cozy ambience.
Overall lighting sources were reduced, and accent lighting was pronounced
to call attention to merchandise and displays. It was meant to feel like someone’s
home—dim lighting overall, with artwork and other areas of interest highlighted.
Many stores and boutiques in department stores use low levels of light to coordinate
with their overall ambience of resembling a townhouse. Department and mass-
market retailers, in contrast, tend to be more brightly lit overall.
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4.3.3 Energy-Efficient Lighting
As the price of energy soars and retailers and their customers become more
energy-conscious, retailers are looking for ways to cut their energy costs and be
more ecologically friendly. One obvious source of energy consumption is the
lighting in a store. Stores are switching from incandescent lighting to more energy-
efficient fluorescent lights.
4.3.4 Color
The creative use of color can enhance a retailer’s image and help create a
mood. Warm colors (red, gold, and yellow) produce emotional, vibrant, hot, and
active responses, whereas cool colors (white, blue, and green) have a peaceful,
gentle, calming effect.
4.3.5 Music
Like color and lighting, music can either add to or detract from a retailer’s
total atmospheric package. Unlike other atmospheric elements, however, music can
be easily changed. For example, one retailer has a system that allows certain music
to be played at certain times of the day. It can play jazzy music in the morning and
adult contemporary in the afternoon. These selections mirror the findings that most
of its morning shoppers are older, whereas afternoon shoppers tend to be in the 35-
to-40-year age range. Retailers also can use music to affect customers’ behavior.
Music can control the pace of store traffic, create an image, and attract or direct
consumers’ attention. Managers realized that although children are the consumers
of their products, adults are the customers. In general, though, slow is good. A mix
of classical or otherwise soothing music encourages shoppers to slow down, relax,
and take a good look at the merchandise.
4.3.6 Scent
Smell has a large impact on customer’s mood and emotions. Scent, in
conjunction with music, has a positive impact on the customer’s level of excitement
and satisfaction with the shopping experience. Scents that are neutral produce more
positive feelings toward the store than no scent. Customers in scented stores think
they spent less time in the store than do those in unscented stores.
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Chapter 5 Conclusion
In this graduation report, I choose the topic: “Developing the retail activities
at HBE”. Opening up with the only objective is to find out the solution to improve
the retail activities in HBE, i mainly focus on three retail theories: central place
theory, supply chain theory and merchandise placement theories as fundamental
theories to apply into analyzing HBE’s retail activities. After that, by giving an
over view of HBE in term of establishment and development, organizational
structure& finance situation, as well as Vietnam retail market, along with the
situation analysis of retail activities in HBE concluding three main factors:
infrastructure, human resources& logistic system; and then i come up with an
evaluation of situation of retail activities in term of strengths and weakness. Based
on what I have found, I shall then give three recommendations to develop retail
activities of HBE; firstly, corporate with other local retailers in order to improve
financial capability and logistic systems; secondly, enhancing customer services;
thirdly, creating an appealing store atmosphere. Moreover, I have gained for
myself a lot of useful knowledge in the retail sector during the research process.
The market change every day, the policy changes every day as well as
customer demand, interest rate…You cannot affect these factors. But, as a retailer,
you can to develop a vaccine in order to overcome difficulty in front of you.
In case of HBE, the most important thing now is to identify the right
business direction long-term as to enhance the financial resources and infrastructure
through solutions such as corporation. The corporation is essential to do because it
not requires multiple procedures that are consistent with the retailers which has
small scale as HBE. Next, HBE need to focus on the work of opening markets
towards rural areas , work to promote the brand and customer retention familiar ...
The proactively training human resource to meet the requirement of modern and
professional are extremely important when in become scarce in term of human at
both levels of management as well as salesman.
44. 44
References
1. Applebaum, W., & Kaylin, S. O. (1974). Case Studies in Shopping
Centre Development and Operation.New York: International Council of
Shopping Centers
2. Christaller, W. (1933). Central Places in Southern Germany. London:
Prentice-Hall [1966].
3. Coe, N. and Hess, M. (2005), "The internationalization of retailing:
implications for supply network restructuring in East Asia and Eastern
Europe", Journal of Economic Geography, Vol. 5 No. 4, pp. 449-473.
4. Dawson, J. A. (1980). Retail Geography. London: Routledge.
5. Emmett Cox. (2012), Retail Analytics, The Secret Weapon, John Wiley &
Sons, Inc., pp 76-78.
6. Financial Statement of HBE from 2010-2013
7. Ha Thi Hong Nguyen, Steve Wood & Neil Wrigley.(2013), The
Emerging Food Retail Structure of Vietnam: Phases of Expansion in a
Post-Socialist Environment, p.14-18
8. Huff, D. L. (1964). Defining and Estimating a Trade Area. Journal of
Marketing, 28(3), 8-38.
9. HBE’s website and database. Accessed at http://hbec.com.vn/hbec/
10.Johan P.Larsson & Özge Öner.( 2014), LOCATION AND CO-
LOCATION IN RETAIL: A probabilistic approach using geo-coded data
for Swedish metropolitan retail markets, pp.5
11.Lösch, A. (1940). The Economics of Location.Jena: Fischer, 1940.
English translation. New Haven: Yale University Press.
12.Michael Levy & Barton A.Weitz.(2011), Retail management, 8th
edition,
Irwin/McGraw Hill
13.Sparks, L., & Dawson, J. A. (1989). Land Use Policy: Institute for Retail
Studies.
14.Thejeswini. G. (2010), “Retail Formats”, Ezine Article.
45. 45
15.Trang Lam.(2014), “Bán lẻ : Ngành hot ở VN 2014” , Trí Thức Trẻ.
Accessed at http://www.gocnhinalan.com/bai-cua-khach/bn-ngnh-hot-vn-
2014.html
46. 46
Appendices
HBE’s human resources qualifications
1. Ho Gia Bao – General Director of HBE and also the Chairman of Board of
Management of HBE
Qualifications:
- Bachelor of Business Development - National Economics University
- Bachelor of Mathematics - University of Pedagogy
2. Ho Phuong Nam – Deputy General Director of HBE,the member of Board
of Management
Qualifications:
- Bachelor of University of Pedagody
3. Nguyen Thai Toai – member of Board of Management, Manager of
Organized and Administrative Department.
Qualifications:
- Intermediate School
4. Ho Thi Nga – Deputy General Dicrector of HBE
Qualifications:
- Intermediate – Da Nang TW2 Food Intermediate School
5. Nguyen Thi Thu Hang – Deputy General Director of HBE, Chief
Accountant
Qualifications:
- Bachelor of Economics - University of Finance and Accounting
6. Nguyen Thi Yen – Manager of Board of Supervisory
Qualifications:
- Intermediate of Finance and Accounting
7. Nguyen Thi Lan – member of Board of Supervisory
Qualifications :
- Bachelor of Economics - University of Finance and Accounting
47. 47
8. Truong Thi Ninh – member of Board of Supervisory
Qualifications:
- Intermidate school
