“The Pharmacity chain has gone ahead, so the scale is very large, and Long Chau takes that as our driving force,” she emphasizes. As for Long Chau, the Company features the efficiency of each store, and it can be affirmed that Long Chau is currently leading in this level of efficiency. Therefore, Long Chau will not trade off its performance to race for the expansion.
That is the question that the shareholders ask the leader of FPT Retail (FRT) – the operator of Long Chau pharmacy chain – at the Annual General Meeting of Shareholders 2022 held recently. Answered by Ms. Nguyen Bach Diep, she says that it is difficult to say whether Long Chau overcome or not, because each chain has different orientations, while Pharmacity is more about convenience and functional foods, Long Chau is more about providing medicines and curing common illnesses for people.
“Not to mention, the Pharmacity chain has gone ahead so the scale is now very large, and Long Chau takes that as our driving force,” she emphasizes. As for Long Chau, the Company features the efficiency of each store, and it can be affirmed that Long Chau is currently leading in this level of efficiency. Therefore, Long Chau will not trade off its performance to race for the expansion.
According to statistics, depending on the location, the rent, the area of the store, etc. the break-even point of revenue per Long Chau store ranges from VND 500 million to 2 billion. Some of Long Chau stores even have sudden sales of nearly VND 10 billion.
In comparison to another strong competitor, An Khang chain of Mobile World Investment Joint Stock Company (MWG), Long Chau insists that they are not worried about competition. The pharmaceutical market is very broad in nature with 57,000 pharmacies in total, while the other chains combined only have 3,000 stores.
“That’s why everyone has the opportunity, competition is not a concern. The good thing is that the goods of pharmaceutical market were a bit messy, now there are many professional chains that will help customers use genuine products, which will be good for the society in general,” says Ms. Diep.
On the other hand, the market is also expanding due to the sharp decline in contraband goods, so there is more room for genuine products, which is also a good sign for the pharmaceutical segment.
Taking a look at An Khang, 2022 is considered the year MWG officially enters the pharmaceutical industry after many years of being left open. In a recent sharing, the representative – Mr. Nguyen Duc Tai says that this is the right time to grow the pharmacy chain model in order to make profits in the pharmaceutical industry.
“The pharmaceutical industry has made good progress after the recent epidemic. Previously, the medicine industry basically only has medicines to cure illnesses, but after the recent epidemic, functional foods and supporting medicines also has very good growth. These are signs that Vietnam’s pharmaceutical industry is starting to change from curing to protecting health. This transition is similar to that in developed countries. In these countries, functional foods, vitamins and medicines that keep the body healthy witness great development“, he emphasizes.
Back to Long Chau, identifying pharmaceuticals as one of the key sections for the future, FRT has been diligently pursuing since 2018 until now. Although many existing retail competitors also join at the same time, most will soon halt the game.
In 2021, the great demand in the middle of the pandemic has brought “sweet fruit” to Long Chau’s efforts. Notably, the chain reaches the revenue of VND 3,977 billion and the profit of VND 4.9 billion for the first time after incurring losses of about VND 158 billion in two years 2019-2020. By the end of 2021, Long Chau owns 400 pharmacies, an increase of 200 stores more than that at the beginning of that year.
In the fourth quarter alone, nearly 100 new pharmacies of Long Chau have come into operation. With these positive signals, Ms. Diep emphasizes that she is working hard so that this year Long Chau can achieve VND 50-100 billion in profit for the whole group.
According to the plan, Long Chau will expand to tier 2-3 provinces and cities, with the target of reaching 700 to 800 stores by the end of 2022. Currently, Long Chau has all kinds of products for each customer segment, and all product ranges are equally profitable. Therefore, bringing the chain to the provinces will not affect the current gross profit margin.
Concurrently, FRT says it also continues to invest in infrastructure and logistics system for the rapid growth of the number of stores and for the optimization of goods, as well as develop and expand private label products to bring customers many quality products at competitive prices. Expectedly, the Company will have about 50 private label products this year.
In the further future, according to the “female general” of FRT, they will not only open pharmacies but also target the healthcare market – this is a very wide array of many fields. Those are also the markets FRT is interested in for overlap in the near future.
Looking back at the journey, it can be said the Company has sacrificed profits to devote to Long Chau, Ms. Diep is proud to say that the chain’s current success formula includes many factors because “retailing requires great synthesis. For example, despite good sources of goods, good prices, the pharmacists cannot give poor advice, or the shopping experience cannot be bad, or the location of the store cannot be hard to enter because of the traffic jam, etc. Overall, it can be said that the customers will only come the store that gives them the best experience”.
The pharmaceutical market is still very large, the whole market of Vietnam has 57,000 pharmacies. In which, pharmacy chains only have about 3,000 stores, thus, they are not too affected. The good thing is that the goods of pharmaceutical market were a bit messy, now there are many professional chains that will help customers to use genuine products, which will be good for the society at large.
According to Tri Tuc, CafeF
Published April 18th, 2022