SMEs pick up short end of supermarket stick
Small and medium sized firms are being crushed and elbowed out in the increasingly fierce competition to become a supermarket supplier.
Nguyen Huynh Trang, deputy director of HCM City’s Department of Industry and Trade, said that with so many local enterprises looking to enter the supermarket roster, both suppliers and distributors must define key commodities, price strategies and mutual benefit criteria to ensure stable demand and supply.
He told the Phap Luat Online (PLO), a news outlet of the HCM City’s Department of Justice, that 80% of goods sold in big supermarkets come from the top 20% of companies that are able to offer high discounts and run prolonged advertisement campaigns.
He gave the example of small businesses having to wait up to one year before their products could go on sale in supermarkets due to strict quality inspections, apart from offering trade discounts of between 15% and 25%.
This makes it difficult for the smaller players unable to match their large peers in producing at lower costs and offering lower prices.
He advised that firms choose distribution channels based on their productivity, financial capacity and customer demographic, instead of looking at supermarkets as a be-all-end-all outlet.
Nguyen Thi Binh Minh, LOTTE Mart Vietnam’s Fresh Food Sales Director, told the PLO that some supermarkets have to extend their account payables for smaller firms to 60 days, as opposed to the 15-30 days payment window.
She said the delay could be blamed on both producers and distributors’ fault, and suggested businesses have a solid, short-term plan to make themselves known to buyers, so that distributors can avoid having goods on their shelves for longer periods.
She also recommended that firms improve their packaging and labeling, like agricultural products having correct geographical indications, or transparent wrapping showing actual goods inside the package.