HO CHI MINH CITY -- Son Kim Group, one of Vietnam's leading privately-owned retailers, and South Korea's GS Retail are planning to launch their first convenience store in Ho Chi Minh City on Jan. 19. The two companies are keen to invest in one of the fastest-growing retail markets in the Southeast Asian region and expect to open more than 2,000 outlets across Vietnam within a decade.
Son Kim Land, the property arm of Son Kim Group, and GS Retail have set up a joint venture called GS25 Vietnam -- majority owned by Son Kim -- to bring the South Korean GS25 convenience store network to Vietnam. GS25 Vietnam is set to open four outlets by the end of January in downtown Ho Chi Minh City, the country's commercial hub, before opening up to 50 more stores later this year. It then plans to enter the capital Hanoi by 2020.
Son Kim Group is one of the top three lingerie and underwear retailers in Vietnam. Apart from its retail business, the Ho Chi Minh City-based company also has interests in property and media, according to Jun Ju Young, managing director of GS25 Vietnam.
GS Retail, one of the two largest convenience store operators in South Korea, said at a signing event for the joint venture last August that it had a 30% stake in the partnership, though declined to reveal how much it had invested.
Son Kim Group is well-known for its underwear stores across the country. Since 2012, the group also partnered with GS Home Shopping to develop a home shopping channel. One of Son Kim's lingerie shops in Ho Chi Minh City has been converted into the first local GS25 store.
The growing trend in Vietnam for internet shopping is one of the reasons why Son Kim is converting its shops into convenience stores, as it moves to modernize its retail approach. E-commerce sales in the country were estimated to grow 25% in 2017, from $5 billion in 2016.
Vietnam still has room for modern retail channels including convenience stores to grow, especially in second-tier cities and rural areas. The convenience segment is expected to account for 45% of total retail sales by 2020, from 25% currently, according to analysts. Statistics showed the country's retail sales were $129.5 billion in 2017, an increase of 10.9% year-on-year, indicating an attractive area of potential investment for foreign investors.
Convenience stores have been booming across Vietnam in recent years, with the aggressive expansion of foreign brands that now hold a combined 70% of the market share, including Circle K, B's Mart, Family Mart, Ministop and 7-Eleven.