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AEON has sold its 30% stake in small grocery chain Fivimart to Vinmart in Vietnam.

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AEON has sold its 30% stake in small grocery chain Fivimart to Vinmart in Vietnam.

Divestment in Fivimart...

After four years of being a part owner and mounting losses, AEON has sold its share in Fivimart (23 stores). It has been reported that the decision to exit was due to poor performance and strategic differences between stakeholders.

Converted to Vinmart stores

All Fivimart stores will be rebranded to Vinmart supermarkets. In addition to fresh and general groceries, these stores will sell the Group’s private label brands, VinEco, VinMart Cook, and Vinmart Home.

AEON still expanding in Vietnam

AEON is still planning to expand its footprint in Vietnam, aiming to reach 500 stores by 2025. The retailer operates around 120 Ministop convenience outlets in the country. For the foreseeable future, it will maintain its 49% stake in Citimart, which it invested at the same time as Fivimart and previously announced ambitious expansion plans. AEON also operates four shopping malls in Hanoi, Binh Duong and Ho Chi Minh City, and two more are under construction in Hanoi and Haiphong.

 

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After three years in operation, VinMart supermarkets and VinMart+ convenience stores form the largest retail chain in Vietnam. Building on this success, the retailer is looking to continue its development over the next two years.

New phase of development

In December 2017 alone, the retailer added 100 new outlets in 11 provinces. On average, three convenience stores were opened per day. At a recent supplier conference, Vincommerce's owner, Thai Thi Thanh Hai, said that there were 65 VinMart supermarkets and over 1,000 VinMart+ convenience stores across 26 provinces.

"In the next phase of development, our top priority is to build strategic partnerships with key suppliers while optimizing supply chain efficiencies," said Mr. Thai Thi. 

Quality control, not just scale

The retailer's plan is to have 200 supermarkets and 4,000 convenience stores by 2020.  It aims to provide quality products with its private label brands across the network. It retails VinEco fruit and vegetables which meets VietGAP standards, produced in its own farms. It also carries VinMart Cook which supplies fresh and ready to eat food, and VinMart Home which produces safe household appliances.

Food safety is a key concern in Vietnam. With its own farms and private label food products, VinMart can control the food quality delivered to its consumers.

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Aeon, the largest retailing group in Japan, is expanding its presence in emerging markets. The retailer is opening small grocery stores in Vietnam and Cambodia. Both economies have been growing at about 6% in recent years.

Raising brand awareness to pave way for mall development

Aeon is known for developing shopping malls. It currently operates four malls in Vietnam and plans for 20 by 2020. However, it is easier and cheaper to open small stores. By opening 500 small grocery stores, it hopes to raise its brand recognition. The retailer has partnered with local supermarket chains, Fivimart and Citimart since early 2015, with 30% and 49% stake in them respectively. It will have a total of 57 supermarket stores. In addition, the retailer has been working with Japan's Sojitz Corporation to develop Ministop convenience stores. The two companies hope to raise their outlets to 800 in the next eight years.

Pilot outlet in Cambodia ready for roll-out

In Cambodia, Aeon opened its first grocery store in late 2015. The retailer has decided to expand to 30 stores in the next three years. The city-centre stores will be around 150 sq.m., similar to convenience stores. Stores in suburbs and new neighbourhoods will be 500-1,000 sq.m. These larger stores will stock both food and non-food items.

Aeon is developing a second large scale shopping mall in Cambodia, expected to be ready in early 2018. For the moment, the retailer's stores will be located in Phnom Penh and the surrounding areas. Its first mall is also in Phnom Penh.

Aeon, the largest retail corporation in Asia, is planning for a second Hanoi mall to open in Ha Dong district.

Heavy investments in Vietnam

Aeon opened two malls in Vietnam in 2014, and one each in 2015 and 2016. The retailer is now planning a fifth mall in the west of Hanoi in 2019. Ha Dong district is receiving investments in an extended ring road system, a bus rapid transport system connecting to downtown Hanoi and an urban railway line. The area is also known to have one of the fastest growing population in Hanoi, with new housing development projects being built. The retailer will invest USD 200m in the new mall as part of its overseas expansion.

Aggressive expansion outside Japan

Aeon has a network of around 300 consolidated subsidiaries ranging from convenience store chains and supermarkets to shopping malls and speciality stores. Under its 2020 strategy, it will add three more malls in Ho Chi Minh City. Outside Vietnam, the company is also running shopping malls in Malaysia, Cambodia and Indonesia. It is looking at the feasibility of new developments in Thailand, Laos and Myanmar.

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