Mobile World gathers stream for future leapfrog

13:40 | 27/11/2018

Vietnam’s leading retailer Mobile World Investment aims for rapid strides into the future, capitalising on a fresh development approach.

mobile world gathers stream for future leapfrog
Mobile World aims to boost the coverage of its Dien May Xanh system in the northern market

The Gioi Di Dong (Mobile World) Investment recently met the shareholders to announce the corporation’s first nine month business results.

The meeting came after the company – Vietnam’s top retailer (ticker: MWG) – had lost trillions of Vietnam dong (tens of million US dollars) in capitalisation after a recent commotion related to an alleged leak of customer data.

Accordingly, in just three days earlier this month, the company lost nearly VND2 trillion ($87 million) in its stock market capital value after the information about the alleged leak had appeared in the media, forcing the company stock into a freefall.

The MWG ticker lost 3.64 per cent, equal to VND4,000 ($0.17), falling to VND106,000 ($4.6) apiece by the end of the November 9 trading session.

In the afternoon of November 9, right after the Ministry of Information and Communications’ Information Safety Authority informed that it found no signs of a breach in MWG’s IT system, the company immediately sent emails to ease the minds of investors and shareholders, but this was not enough to fully ease concerns.

Specifically, MWG is one of two tickers making Pyn Elite Fund – one of the largest foreign investment funds currently operating in the Vietnamese stock market – to suffer the most in 2018 through losing around EUR12.28 million ($14.01 million), while MWG was this fund’s growth engine last year.

MWG is the largest investment accounting for about 15 per cent of Pyn Elite Fund’s investment portfolio currently.

Enlarging market share amidst booming e-commerce

At MWG’s recent meeting with investors, the company’s new business strategy grabbed the greatest attention, surpassing investors’ concerns over the alleged information leak.

At MWG’s recent meeting with investors, the company’s new business strategy grabbed the greatest attention, surpassing investors’ concerns over the alleged information leak.

Accordingly, the company envisages opening 900 electrical appliance stores in the next two years to seize up to 50 per cent of the market.

MWG currently holds 35 per cent of the Vietnamese home and electrical appliance market.

In the near future, the company is set to expand its Dien May Xanh outlet chain from 747 units at present to 900 units, while simultaneously upgrading Tran Anh stores which also sell home appliance products and have the potential to reach and surpass their set business targets, while closing underperforming units to save costs.

According to industry experts, combining the two brand names into a single one (Dien May Xanh) is a smart move as the marketing cost for developing both brands is hefty.

An expert in the home appliance field anticipated that MWG would increase the coverage of its Dien May Xanh store system in the north as it proves easier to find space, especially small lots, for network expansion.

In addition, from December 2018, MWG will test its new dual-pricing scheme and promote online sales to boost revenue.

The new approach aims to push up online sales revenue, the segment the company has not paid due attention to until present.

“We want to increase value-added services to each product we sell,” said MWG’s chairman Nguyen Duc Tai.

Accordingly, each item will have dual pricing: one tied with many utilities, such as quick delivery, assembly, and guarantee services, with another lower price available where customers need to pay for technical support.

The new move is part of the company’s new approach to retain growth: selling products that the company has yet to sell and providing services to the customers it has yet to serve.

In the online business, the company will focus on three product branches: handsets, electric appliances, and fast manufacturing consumer goods (FMCG).

Targeting Generation Z

Experts assume that MWG’s current development was mainly driven by its Dien May Xanh chain as the electronic, home, and electric appliances segments have accounted for 40 per cent of the company’s revenue.

Based on its current scale, it would be hard for the store chain to maintain its robust growth in the near term, while its handset retail shop system has seemingly reached saturation and the scale of its Bach Hoa Xanh shop system remains modest.

Figures by market research firm Euromonitor suggest that Vietnam is one of the countries taking the lead in electric appliance sales revenue and the single nation in Southeast Asia posting double-digit growth in this segment during 2018-2022.

The leading retailer has thus decided to turn towards Generation Z consumers (people who are born between the late 1990s and the mid-2000s).

According to chairman Tai, there are stark differences in the consumer behaviours of middle-aged people and Generation Z, and MWG will work out plans to effectively serve this customer group in the years to come.

MWG has studied the Generation Z’s consumption habits and is contemplating changes to its business plans to fit this customer group’s requirements.

“Without change we would face losing this customer group to the hands of foreign retailers,” Tai said.

By the end of 2018’s third quarter, MWG had a total of 2,184 retail stores, of which its Dien May Xanh store chain caught a revenue growth of nearly 80 per cent against 2017’s similar period, whereas the growth of its handset store chain hovered at around 19 per cent. Despite reporting still modest revenue, its Bach Hoa Xanh store chain saw a sharp jump in on-year revenue growth of 235 per cent.

In the first 10 months of this year, MWG raked in VND72.275 trillion ($3.14 billion) in total consolidated revenue and VND2.413 trillion ($105 million) in consolidated after-tax profit. Online business accounted for 13.5 per cent of the company’s total revenue amounting to VND9.848 trillion ($428 million), growing 117 per cent on-year.

Anh Hoa-Hong Phuc

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