FPT Retail plans to open 48 new stores of the Long Chau pharmacy store chain in this year.
At the annual general meeting of shareholders in the morning of March 27, most questions of investors for the leadership of FPT Digital Joint Stock Company revolve around the venture into pharmaceutical retail section. This is the new section deployed by the Company since the end of 2017 after its acquisition of Long Chau pharmacy stores chain.
Ms. Nguyen Bach Diep, the Company’s Chairwoman of Board of Directors and CEO admits it was very daring of her to obtain over 70bn from the Company to personally venture into this section although she had no relevant experience. She decided she had to acquire a pharmacy store chain of small scale to limit risks and evaluate performance.
“When learning of our intention to join the pharmaceutical retail section, many chains offered to sell their stores and brand names to us. However, we chose Long Chau as the chain possessed 4 stores, each of which gained a whopping average turnover of 3bn VND per month. We were intrigued to know how they could attract customers and how their turnover vastly outdo other chains,” said the FPT Retail’s leader.
After 2 years of taking-over, Ms. Diep experimented various models for the pharmacy store chain including putting them in the same location of FPT Shops to cut location cost, utilizing the readily available customer base or opening pharmacy stores adjacent to competitors’ stores in the same area and around hospitals.
By the end of last year, Long Chau pharmacy store chain expanded to 22 stores in Ho Chi Minh City, Dong Nai with new stores to be opened in Tien Giang and An Giang.
A pharmacy store of FPT Retail in Cu Chi District, Ho Chi Minh City. Photo: Long Chau Fanpage.
Pharmaceutical retail brought in over 380bn of turnover in 2018. Medicines and functional foods account for 58% and 30% respectively in the structure of turnover by product. The rest come from medical equipment and cosmeceuticals.
FPT Retail estimates the pharmacy store chain is recording a turnover of 1.6bn per day. This year turnover is expected to be 500bn, while net loss is expected to be about 20bn.
The Company’s leadership thinks bearing the small amount of loss for the first 2 years for chain building is normal. Such bearing is even more satisfactory in comparison with when the Company began developing its mobile phone retail section as vast amounts of resources were poured into building logistics, increasing the number of pharmacy stores and building a staff with suitable management and professional capabilities.
“There are 30,000 pharmacy stores of various sizes nationwide, but there is no truly dominating player. Opportunities are still abundant out there. Our key task is to expand to 70 stores within this year and to 700 by the end of 2022,” said Ms. Diep. She also stated she would evaluate the possibility of distributing or investing into pharmaceutical factories should there be favorable conditions.
In her previous interview with VnExpress Ms. Diep gave the opinion that the pharmaceutical retail section had high profit potentials backed by various indicators. For instance, the market size is about 4.5bn USD (equivalent to the size of mobile phone section and higher than that of household appliances and laptop retail sections) with guaranteed 2-digit annual growth rate thanks to its independence from economic situations and the estimated annual spending of 30 USD on pharmaceuticals of each Vietnamese person, etc.
According to Phuong Dong, Vnexpress