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Home brand products are quality tested and prices are low due to cost cutting in the supply chain and reduced production costs.
Foreign retailer giant Metro Cash & Carry Vietnam started this trend right after it set foot in Vietnam.
With its experiences from other markets in the world, Metro has continuously launched its own brands for many product categories, ranging from food items, household utensils and cosmetics to office equipment – such as Aro, Fine Food, Fine Dreaming, Horeca, H-line and Sigma.
Similarly, the local Co.op Mart supermarket chain launched home brands making up about 500 out of a total of 20,000 shelf items.
Meanwhile, the Vietnam National Textile and Garment Group’s Vinatex Mart supermarket chain has developed its Vinatex Fashion brand for garments for adults and children. Vinatex Mart has workshops to make products, providing its own designs and materials.
The Big C supermarket chain launched new home brands for garments and bakery after success with trademark bacon eBon in 1998. The retailer also plans to launch new home brands for dried food and bottled water.
Nguyen Thai Dung, Big C deputy general director, stressed the advantages in developing trademarks, saying that although prices of the home brand products are lower than other brands in the same categories, the profits are higher.
It is easy to monitor customer demand and favourites and change commodities offered to preferred items, he added.
Big C has launched about 500 home brand commodities and gained a growth rate of 40-50 per cent in these products.
However, development of home brands is facing difficulties due to lack of consumer understanding about such products and concerns about quality.
Thanh, a housewife in Hanoi’s Cau Giay district, said she liked branded products because cheaper goods were often of low quality. Of 20 interviewed shoppers at Big C, only two said they recognised several home brands and the remainder said these were cheaply priced products in the supermarket.
Additionally, many manufacturers do not consider that cooperation with supermarkets to produce the retailer’s trademarks is a long-term trend due to lower profits against doing business with their own brands. In the future, they are likely to lose their brands or become professional contractors for supermarkets.
Still the home brand is expected to play an important role in the general growth of distributors and become a regular choice of Vietnamese consumers in the coming years.
Pascal Billaud, Big C general director, recommended manufacturers should carefully select products for cooperation and map out a diverse development strategy in order to offer multiple choices for consumers and avoid falling into the situation of self competitiveness.