In 2019, FPT Retail has planned to reach the net revenue of VND17,700 billion, profit after tax of VND418 billion, equivalent to the growth of 16% and 20%, respectively.
The accessories bring high profits
In order to achieve the growth target set out, FPT Digital Retail Joint Stock Company (HoSE: FRT) will open new stores, boost online sales, increase the industry of accessories and sim cards.
Specifically, regarding IT industry, FRT will open 100 new stores in order to have 633 stores in total. Accessories such as memory cards, cases, backup chargers, etc. are expected to bring about VND1,000 billion in revenue for FPT Retail this year. The reason why FRT focuses on developing accessories is because such sector brings high profits.
According to Ms. Nguyen Bach Diep, the Chairwoman cum General Director of FPT Retail: “FPT Retail will change the suppliers and buy accessories from its origin in order to have higher profits”, it is increased by 10% compared to previously.
Besides, FRT will focus on sim cards, scratch cards, increase the number of customers coming to the stores with the target to increase the revenue by VND100 billion. Also in this year, FRT will also promote the online sales channels, bringing the stores to residential areas of other districts and communes.
FPT Retail will improve the proficiency the procedures for F.Friends project. Accordingly, F.Friends is the model that FRT will come to the customers and sign contracts. Their staff can buy any products under instalment with 0% interest, the monthly debt will be deducted from the salary. Instalment model F.Friends is more professional than the normal one.
Ms. Diep shared that: “The growth plan of this year is not very easy for FRT, because FRT is a later retailer facing some difficulties, and when it started with such model, the market had already been saturated”, especially at the time when Long Chau pharmacies still incur losses.
Long Chau will generate profits in 2021
Concerning Long Chau pharmacies, FPT Retail expects to open 50 new pharmacies, which means the number of stores is 72 in total. From 2020 to 2022, FRT will open from 100 to 200 new stores each year. By 2020, Long Chau is expected to have 700 stores.
FPT Retail estimates that Long Chau chain is recording the revenue of VND1,6 billion each day. This year’s target is to reach the revenue of VND500 billion, gross losses of VND20 billion. The target for 2020 is to reach the revenue of VND1,910 billion and to stop incurring losses. By 2021, Long Chau will start to generate profits with the expected revenue of VND4,370 billion and profit of VND63 billion and by 2022, the revenue of VND6,500 billion and profit of VND193 billion.
In order for Long Chau to have good result of operation, in the coming time, FRT will focus on logistics segment and develop the pharmaceutical personnel. The Company expects to account for 30% of the pharmaceutical market share through pharmacies in the next 3 to 4 years. It is predicted that the pharmaceutical industry will contribute about 40% to FRT’s revenue (about VND10,000 billion) in the future.
In 2018, Long Chau chain reached the revenue of more than VND380 billion. Medicines and functional foods accounted for about 58% and 30%, respectively, of the revenue classified by product. The remaining revenue came from medical equipment and cosmetics.
According: Minh Anh, Nhip Cau Dau Tu
The significant decrease in the stock price caused the market price of each FPT Shop fall down to VND5,5 billion, which is unreasonable according to Ms. Nguyen Bach Diep.
From the beginning of 2019 until now, the stock price of FPT Digital Retail Joint Stock Company (FRT code) plummeted. At the end of 2018, FPT Retail’s stock price was at VND71.900 per share. At 28 March, the stock price of FPT is at VND48.000 per share, down more than 33%.
Ms. Nguyen Bach Diep (holding the microphone), is giving speech at the FPT Retail’s Annual General Meeting of Shareholders 2019 – Photo: Hai Dang
“However, according to our evaluation, we consider that such price is far lower than the real value of FPT Retail”, a contributor of FPT Shop said.At the FPT Retail’s Annual General Meeting of Shareholders held on 27 March, after being questioned on such issue, Ms. Nguyen Bach Diep – the Chairman of FRT cum General Director of the Company – admitted that FPT Retail’s shares have just been listed for less than 1 year, the Board of Management is not experienced in the stock exchange, and they have no idea about why the stock price falls dramatically.
With the current stock price, Ms. Diep is calculating the market price of FRT of VND3,200 billion. If such price is divided to 570 stores of Long Chau and FPT Shop, the average value of each store is at VND5,5 billion.
Ms. Diep stated that such revaluation is unreasonable, because the cost of construction, inventory, brand costs, operating personnel, website with a high rate of access, switchboards, etc., in total, will exceed the amount of VND5,5 billion.
“If compared to other retail chains, even listed and unlisted chains, the value of each of their store is from VND20 to VND50 billion, therefore, it is not reasonable that the value of FPT Shop is VND5,5 billion.”
A store of FPT Shop is about to open – Photo: Hai Dang
“The large scale and high profit of pharmaceutical industry are a direction for potential development of the Company,” added by Ms. Diep to prove that the market value of FRT is being evaluated incorrectly.With the acquisition of Long Chau drugstores since 2017 for business expansion, Ms. Diep said that there is high potential in the pharmaceutical retail industry. The scale of such industry is estimated to be at VND4,5 billion – the same as mobile industry – as a result, if FRT holds about 30% of the market share without the presence of any big retailers, FRT’s revenue can increase greatly from this new industry.
Although Ms. Diep does not know the reason for the dramatic decrease in the stock price, she thinks perhaps it is due to late payment, little transactions, which make the stock price go down.
“In general, we have recognized these issues and are having some solutions such as purchases of consulting service and we will have ways to improve the payment issue”, said the CEO of FPT Shop.
In 2019, FPT Retail has planned to reach the revenue of VND17,700 billion, profit after tax of VND418 billion, equivalent to the growth of 16% and 20%, respectively, compared to 2018. Ms. Diep revealed that in 2019, they will open 100 additional stores, reaching 633 stores in total. Besides the expansion in large central areas, the new stores will be available in residential areas of unexploited districts and communes.
In 2018, FPT Retail’s total revenue reached VND15,298 billion, up 16% compared to 2017. Online revenue was at VND2.432 billion, with the growth of 21%. Profit before tax reached VND435 billion, profit after tax reached VND348 billion, up 20% compared to 2017.
According to Hai Dang, ICTNews
AGM of Shareholders of FPT Retail: Plan to expand number of pharmacy stores to 70 into provinces neighboring Ho Chi Minh City
FPT Retail stated they are planning to expand in 2019 the number of pharmacy stores into 70 into provinces neighboring Ho Chi Minh City such as Binh Duong, Long An, etc. Meanwhile in Ho Chi Minh City, there has been no Long Chau store failing to break even later than 6 months.
In the morning of March 27 at Continental Saigon Hotel, FPT Digital Joint Stock Company (FPT Retail, HoSE stock code: FRT) held its Annual General Meeting of Shareholders of 2019.
At the AGM, shareholders voted to approve significant contents of the Company including: Approving the 2018 income statement of 2018 and audited financial statements, the 2019 business plan; the profit distribution plan for 2018 and 2019, the plan of issuing ESOP shares for 2018 and ESOP shares issuing policy for 2019; the report on remuneration for the Board of Management and Supervisory Board in 2018 and the remuneration plan for 2019.
In the year 2019, FPT Retail aims to achieve 17,700bn in turnover and 428bn in expected profit after tax, which means a growth rate of 16% and 20% respectively compared to 2018.
FPT Retail stated they are planning to expand in 2019 the number of pharmacy stores to 70 into provinces neighboring Ho Chi Minh City. The pharmacy industry has significant long-term growth potentials. Therefore, FPT Retail set the initiative to develop into this industry with good planning and control as similar to operating the electronic retail system of the Company. The Company will accordingly focus on building logistics, increasing the number of pharmacy stores and developing a staff with suitable management and professional capabilities.
In Vietnam, the pharmacy retail industry is divided practically into 3 channels – hospital channel, clinical channel and pharmacy store channel. FPT Retail expects to gain a market share of 30% of the pharmacy store channel in the coming 3-4 years. Accordingly, the pharmacy retail industry is anticipated to contribute about 40% into FPT Retail’s expected turnover of 10,000bn VND.
At the AGM, FPT Retail leadership shared the plan to open Long Chau pharmacy stores in provinces neighboring Ho Chi Minh City including Binh Duong, Long An, etc. Stores in Ho Chi Minh city has quite stable business performance without any store having breaking-even point later than 6 months. Moreover, the number of Long Chau pharmacy stores can be small but they achieve 3bn VND of turnover each month, while an ordinary store can do only 300-400mn per month.
As for the store network, FPT Retail said apart from urban centers, new FPT Shops would be opened further towards residential areas of presently uncovered districts and communes.
The Company will also keep on improving and applying many technologies in the process of approving and managing customer files and risks. Furthermore, FPT Retail would develop project staff at each region in order to search for and utilize optimally potentials from affiliated businesses as well as to run the project more effectively.
For instance, with the F.Friends program, the Company’s representatives would directly reach enterprises for contract signing, after which employees of such enterprises would be allowed to buy any product on credit at the interest rate of 0%, monthly installments would be deducted directly into their salaries. The FPT Retail leadership sees this as more professional buying compared to normal buying on credit.
As for the share price, the leader of this retail chain said that the FRT share is at a very high price compared to its genuine value. The Company is hiring consultants to find suitable solutions in this matter for shareholders.
According to Thanh Long, VietnamFinance
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.
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.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.
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
USD on pharmaceuticals of each Vietnamese person, etc.
According to Phuong Dong, Vnexpress
Saturation has hit the mobile phone retail market, which urges FPT Digital Joint Stock Company (FPT Retail, stock code: FRT) to get a firm grasp on the pharmaceutical retail section and venture into trading products it has no experience about.
Acquisition of the Long Chau pharmacy store chain
FPT Retail dedicated the whole year of 2018 in experiments and search of a general formula for expansion of Long Chau pharmacy store chain with the number of stores in 2021 30 times as many as the current number.
Previously in the end of 2017, Ms. Nguyen Bach Diep, Chairwoman of BOD of FPT Retail, the person undertaking to borrow nearly 71bn VND from the Company to “secretly” buy 75% of stocks of 4 stores of Long Chau pharmacy chain. Throughout the experimental period, Ms. Diep informed the press this was her personal project.
At the 2019 Annual General Meeting of Shareholders held recently, Ms. Bach Diep disclosed the experimental period of Long Chau chain model in 2018 when store locations were continuously changed. Store locations moved from streets near crowded residential areas to areas around hospitals and markets, even adjacent to competitors’ stores.
There was an experimental location which made very good turnover and gained profit right in the first month.
At the acquisition, Long Chau chain had 4 stores and suffered a monthly loss of about 100mn VND each month as the medicines were near or past expiry dates. This amount has now lowered to over 10mn VND each month, while the daily turnover of the 22 store chain scores 1.6bn VND.
FPT Retail expects Long Chau chain’s loss in 2019 to be 20bn VND and a turnover of 500bn VND.
“In 2020, this pharmacy store chain will reach the breakeven and bring in 1,910bn VND in turnover. In 2021, Long Chau will make a profit of 62bn VND and the turnover of about 4,370bn VND,” Ms. Diep believed.
At the 2018 AGM, FPT Retail presented the plan to open only about 400 Long Chau pharmacy stores from then to 2022. However, after finding a general business formula, the Company announced a more ambitious plan of making a turnover of 6,500bn VND from 700 Long Chau stores and a profit of 193bn VND in 2022.
Beside medicines, Long Chau stores will also trade in medical equipment, cosmeceuticals and functional food.
Ups and downs with “the bitten apple”
FPT Retail is testing in 3 projects, one of which being the electronic appliances section. Meanwhile, this enterprise with 347bn VND of profit for 2018 is having a hard time with products under the brand name Apple.
“We estimated there was about 40% of the market of Apple products were distributed as hand-carried goods. But the ratio may have risen to above 60%. Trading of newer iPhone versions are getting gloomy and FPT Retail is requiring support from Apple and delaying opening new F.Studios,” Ms. Nguyen Bach Diep shared.
At the 2018 AGM of FRT, the plan of 12 F.Studios featuring Apple products would be expanded to 100 studios in the next 4 years, while there were only 2 new F.Studios last year.
When the time comes, the F.Studios will prove FPT Retail has strengths in high-end products. Moreover, its direct importation of iPhone, Macbook, iPad products from Singapore will cut down intermediary costs.
In compensation for the turnover of F.Studios chain, FPT Retail will concentrate its resources into the important business retail section of accessories in this year with the expectation of 1,000bn VND in turnover and nearly 500bn VND in gross profit.
According to Hong Phuc, Bao Dau Tu
On FPT Shop’s website, this retailer has started its sales business of electronic products to compete with its rival, The Gioi Di Dong.
FPT Shop has launched a page of electronics on their website selling products such as refrigerators, televisions, washing machines and cameras, etc.
According to FPT Shop’s website, this chain has cooperated with the retailer Nguyen Kim in selling these new items. Therefore, besides the main product of mobile phones, this retailer of FPT Corporation has decided to start its business in household electronic products.
FPT Shop cooperated with Nguyen Kim in selling electronics online – Photo: Hai Dang
The representative of FPT Shop revealed that the cooperation is still in progress and has not yet been made public. The sales of electronics is being conducted online only.On the website of the mobile retail chain with the second largest market share in Vietnam, there are a wide variety of products such as air conditionings, air purifiers, speakers, cameras, household appliances, office equipment, etc. which are products provided by Nguyen Kim, a long-term technology retailer in Ho Chi Minh City.
Before FPT Shop, The Gioi Di Dong has opened Dien May Xanh which specializes in selling electronics, and at the moment, this chain has the biggest market share in such industry.
According Hai Dang, ICTnews
In the year 2019, FPT Retail aims to achieve 17,700bn VND in turnover and 428bn VND in expected profit after tax, which means a growth rate of 16% and 20% respectively compared to 2018.
In the morning of March 27 at Continental Saigon Hotel (132 – 134 Dong Khoi Street, Ben Nghe Ward, District 1, Ho Chi Minh City), FPT Digital Joint Stock Company (FRT) held its 2019 Annual General Meeting of Shareholders.
The 2018 income statement and 2019 business plan were reported at the AGM. At the AGM, shareholders voted to approve significant contents of the Company including: Approving the 2018 income statement and audited financial statements, the 2019 business plan; the profit distribution plan for 2018 and 2019, the plan of issuing ESOP shares for 2018 and ESOP shares issuing policy for 2019; the report on remuneration for the Board of Management and Supervisory Board in 2018 and the remuneration plan for 2019.
Turnover in 2018 reached 15,298 bn VND
In 2018, FPT Retail recorded a total turnover at 15,298bn VND, up by 16% compared to 2017. Turnover from online trading reached 2,432bn, which recorded a rise by 21%. Profit before tax reached 435bn and profit after tax reached 348 bn, up by 20% compared to 2017. In order to achieve such business results, the Board of Management and Board of Directors implemented effective solutions for the 2018 business plans and continuously generate new business plans.
By the end of December 2018, the total number of FPT Shops is 533 with an increase of 60 shops compared to the end of December 2017. Average sales of each shop scored 2.4bn/month, with a slight increase compared to 2017.
Moreover, the number of F-Studio by FPT shops (including APR and AAR side-by-side shops) reached 14 in 2018. Sales of this shop chain contributed 423bn in FPT Retail’s total turnover, up by 61% compared to the same period of 2017.
After re-activating the F-Friends selling on credit program and the Subsidy selling price support program in the end of August 2018, sales from the two programs contributed 5.3% and 5% respectively in FPT Retails’ total turnover in 2018.
Ms. Nguyen Bach Diep – Chairwoman of Board of Directors and CEO of FPT Retail shares that the Company sets its 2019 net turnover target at 17,770bn VND, profit after tax at 418bn VND, increasing by 16% and 20% respectively.
In 2018, FPT Shops’ online trading section continued to grow. Accordingly, the website FPTShop.com.vn had 360,325,253 visits with a 41.6% increase compared to 2017, 1,780,887 visits of which were directly interactive with customers. This aids in a soar in online trading sales of the Company in 2018, up by 21% compared to 2017.
2019 – Year of investing in expansion of the Long Chau pharmacy store chain
In the year 2019, FPT Retail aims to achieve 17,700 bn in turnover and 428 bn in expected profit after tax, which means a growth rate of 16% and 20% respectively compared to 2018.
In order to realize the plan step by step, FPT Retail will implement concurrently its key business retail sections.
As a part of the whole 2019 plan, the Company will expand into other retail sections with pharmaceuticals being at the top of the list as FPT Retail plans to expand the number of Long Chau pharmacy store to 70 and increase coverage nationwide.
According to the Company’s leadership, the pharmaceutical section has significant long-term growth potentials. Therefore, FPT Retail set the initiative to develop into this section with good planning and control as similar to operating the electronic retail system of the Company. The Company will accordingly focus on building logistics, increasing the number of pharmacy stores and developing a staff with suitable management and professional capabilities.
In order to achieve the turnover target of 17,700bn VND, one of the key business sections gets heavily invested is pharmaceutical retail section with the expansion of the Long Chau pharmacy store chain to 70 stores.
In Vietnam, the pharmaceutical retail section is divided practically into 3 channels – hospital channel, clinical channel and pharmacy store channel. FPT Retail expects to gain a market share of 30% of the pharmacy store channel in the coming 3-4 years and the section will contribute about 40% into FPT Retail’s expected total turnover of 10,000bn VND.
Moreover, the Company will also strongly develop the section of accessories and SIM cards. With its many years of experience in the technical goods retail industry, FPT Retail realized the section of phone accessories and SIM cards is one of the highly profitable sections.
Therefore, FPT Retail boldly sets turnover targets for 2019 of accessories at 1,000bn VND, up by 350 bn VND, while collection SIM card is expected to increase by 100bn VND. These will be strategic sections contributing into turnover and high profit for FPT Retail in 2019.
In the face of the e-commerce boom, FPT Retail will offer numerous promotional and discount programs to fit best the online selling method. To be specific, products of equivalent quality and guarantee policy when being sold on the website will have lower prices compared to when being sold at shops. Moreover, new products will be constantly updated by the manufacturers with priority for eye-catching, trendy products expected to sell well.
According The Hai, Bao Dau Tu
While its core retail section of mobile phones is getting saturated this year, the FPT Digital Joint Stock Company (FPT Retail, stock code: FRT) seeks to boost growth through the new section of electric appliances and plans to rapidly expand size of the pharmacy store chain.
“Electric appliances is one of the sections we are negotiating and about to test,” Ms. Nguyen Bach Diep, Chairwoman of BOD and CEO of FPT Retail informed Forbes Vietnam beside the 2019 AGM held in the morning of March 27. The Company plans to test selling electric appliances inside FPT Shops, said Ms. Diep.
There are 3 projects being in test. Informing shareholders on the new direction of FPT Retail, Ms. Diep said the Company would evaluate and cut sale area of product groups in saturation phase while increasing space for the new section, the investment plan of which would be made public when highly successful test results are reached.
With the mobile phone market heading into gradual saturation, seeking new markets is what large retail chains like Mobile World and FPT Retail are doing. Mobile World has expanded into the food section with its Green Stores and the recently announced wristwatch retail section. Meanwhile FPT Retail expanded its pharmaceutical retail section.
According to the market research agent GfK Vietnam, the mobile phone market grows only by 1% in 2018 compared to 9% in 2017. The electric appliances section, however, has a higher growth rate, specifically 23.5% in electronics, 12.5% in electronic refrigeration and 3.7% in household electronics.
FPT Long Chau expects loss of 20bn VND in 2019 and gains profit from 2021 onwards. Source: FPT Retail (unit: bn VND)
In 2019, FPT Retail will boost development of the pharmaceutical retail chain under brandname FPT Long Chau after acquiring the Long Chau pharmacy store chain well-known in Ho Chi Minh City 2 years ago. From a modest start of 4 stores, now the chain has 22 stores located mainly in Ho Chi Minh City. The chain scored a turnover of 384bn VND in 2018, up by 91% compared to 2017.
According to Ms. Nguyen Bach Diep, for the period from 2019 to 2022, pharmaceutical retail is the key and potential section driving FPT Retail’s growth. The Company will increase the number of stores to 70 with the target turnover of 500 bn, while expecting a loss of 20bn for this section.
“If results are successful, we will continue to open 100-200 new stores each year,” said Ms. Diep. “Our first goal is increasing coverage nationwide while controlling logistics and investing into the staff.”
Ms. Diep emphasized the currently gigantic potentials of the pharmaceutical retail section with a spending size of about 4.5bn USD, equivalent to that of the mobile phone market. FPT Retail expects to gain a market share of 30% of the pharmaceutical retail section in the coming 3-4 years and the section will contribute about 40% into FPT Retail’s expected total turnover of 10,000bn VND.
The leader of FPT Retail shared that western medicines contributed 58% in turnover for the year 2018. However, functional food is the section with the best profit margin contributing 49% in FRT’s profit, followed by medicines and medical equipment.
According to the plan for developing the pharmacy store chain, FPT Retail aims to stop planned loss in 2020 and begin to profit from 2021 onwards. However, Ms. Diep has not been able to pinpoint the breakeven as this depends on each store model being tested by the Company.
The Company divides the pharmacy store chain into 3 types A, B and C corresponding to different turnover and investment sizes. Ms. Diep said a type A store gained at least 1.2bn in monthly turnover, type B store and type C store 1.2bn and under 1.2bn respectively. For the first phase, the Company focuses on developing type A stores.
Despite contributing only 30% in turnover, the functional food section adds half of FPT Long Chau’s gross profit. Source: FPT Retail
The store with highest turnover currently gained 9bn/month, said Ms. Diep to Forbes Vietnam. Most of the new stores will be opened this year with the lowest turnover of about 700mn/month. According to Ms. Diep, one of the reasons why FPT Long Chau stores attract customers well and fill numerous medicinal prescriptions is the availability of more than 6,000 various products.
At the end of 2018, FPT Retail gained a total turnover of 15,298bn, up by 17% and profit after tax of 348bn, up by 20% compared to 2017. Despite the saturation of the mobile phone market, the turnover of this section alone increased by 24% thanks largely to new shops continuously being opened. FPT Retail still has to seek new paths for growth, as according to plans, the mobile phone retail chain with current 533 shops will stop expanding after 2019.
The retailer is also turning to other sections like F.Friends – a selling program which helps FPT Retail reach employees of factories and enterprises. In 2018, this program had more than a million members, most of whom are workers from 2,500 factories in cooperation with FPT Retail. The Company plans to turn the focus to office staff workers in enterprises.
Moreover, FPT Retail wants to develop the phone accessories retail section this year, which is expected to bring in 1,000bn in turnover and almost 500bn in gross profit.
According Truong Bui – Pham Nhi, Forbes Viet Nam
While competitors are still probing the landscape, FPT Retail has already poured all resources into the pharmaceutical retail market. Despite being such a pioneer, Ms. Nguyen Bach Diep dares not making any guarantee she will win.
The FPT Retail’s leadership admitted that the Company was going through a quite difficult and “dangerous” transitional period.
For instance, due to various objective and subjective reasons in 2018, the turnover from Apple products and the expansion speed of the Long Chau chain were lower than expected.
According to FPT Retail’s forecast, the Long Chau pharmacy store chain will bear a loss of 20bn VND in 2018 and the first amount of profit for FPT Retail from this chain would come no sooner than the year 2021. Therefore, they will continue to open 100 new FPT Shops in 2019 to ensure the growth rate above 20%. Moreover, with the newly arrived trend of omni-channel retailing, this is the last time for FPT Retail to open new FPT Shops.
When the smartphone market steps into saturation, pharmaceuticals retail will be the key growth driver of FPT Retail. These are the reasons FPT Retail proceeds to invest resources into the pharmaceuticals retail market while many domestic competitors are still probing the landscape. Despite all the advantages available at hand, Ms. Nguyen Bach Diep , CEO of the Company selects to play it safe, as many always say “whatever will be, will be.”
You expressed high expectations for Apple products at the 2018 AGM of Shareholders, but 2018 was a rather bleak business year of the brand worldwide compared to previous years. Did this affect FPT Shops’ turnover?
Ms. Nguyen Bach Diep: Of course it did. The reason why we did not open any new F-Studio in 2018 and mention this section in the Report before this year AGM of Shareholders is that our 2018 turnover was not that high as we expected.
I have never seen such a failure of an Apple new product like in this year. In previous years, the period from November to the first quarter of the year after was our glorious days. It is the other way around for this year. The market of iPhone products consists of 40% hand-carried goods and 60% authentic products. This year’s iPhone XS does not sell well globally, so it came flooding into Vietnam by hand-carried way. This created a vast difference between the price of hand-carried products and the price of authentic products, and redivide the market into shares of 60% hand-carried products and 40% authentic products.
We can only increase the number of F-Studios once we receive better support from Apple in the future.
Market researchers assume that saturation will hit the smartphone market in 3 to 4 years. However, the e-commerce retail section will continue to thrive at galloping speed. What do you think about the relation of these two facts?
Ms. Nguyen Bach Diep: E-commerce and Omni-channel are the popular development trends internationally. Therefore FPT Retail cannot stay out of the game. With widespread chains in large cities, we possess quite many advantages when entering the omni-channel section, as customers love visiting the stores to touch, experience and test products before making a buying decision.
Therefore the online IT goods retail section in Vietnam still has abundant development ground compared to the offline trading section. Omni-channel will help FPT Shops maintain the growth rate.
Of course there can’t be a business model which helps the enterprise grow forever. The market can step into saturation after some years should there be no ground-breaking technology invented similar to what iPhone once did years ago by changing from the mechanical button to the touchscreen technology. That means if the smartphone industry fails to bring in unique technologies, customers will no longer have needs to change devices often.
Being a enterprise specializing in retailing, we understand when our market share reaches a certain number, there will be no more ground for us to grow and we must engage into new sections. A retail company will regard processes, retailing experiences and chain management experience as their business “know how” to be applied into new sections.
Omni-channel retail is the inevitable trend in modern retail, in which information infrastructure, apart from the human factor, plays a critical role for success or failure of a enterprise employing this model. With FPT – a giant in Vietnam’s IT industry – being a significant shareholder of FPT Retail, what advantages does FPT Shop have against competitors when entering this game?
Ms. Nguyen Bach Diep: The FPT Group, a significant shareholder of FPT Retail, is a long-standing technology enterprise of Vietnam. Mr. Truong Gia Binh, FPT’s President, usually recommends that “FPT Retail operate as a retailer not a merchant chasing too often after pennies. It is advisable to get rid of the traditional ways and apply information technology into both fields of governance and business operations.”
Therefore, all member companies gets support from the technology board of the group. Of course we have to give “problems” for them to solve, they cannot do everything for us. For instance, the chatbot and customer visit counter technologies being in use at every shop were developed by the Board of Technology of the group.
After trying 3 to 4 different versions, FPT Shop embedded the integrated chatbot technology into their forums and website last year. FPT Shop’s chat bot can now answer 75% of users’ questions. Many users did not know that was the chatbot, because the chatbot generates very fast and accurate answers.
At each store, we also use a customer visit counter to know when is the most or least crowded time of each shop in order to coordinate service staff reasonably, which ensure enough service staff members to serve customers.
The two technologies above helps us vastly optimize our personnel, cut down costs and enhance competiton capabilities against competitors.
With the omni-channel trend, many retailers – even in the smartphone retail section – stopped opening new stores or decrease the number of stores to focus on online trading. Why FPT Shop goes on to open 100 new shops in this year?
Ms. Nguyen Bach Diep: I think the offline stores will still do well after 3 to 5 years to come. Therefore our opening new shops in 2019 brings no problems. From now to the end of this year, however, FPT Retail will not open any more FPT Shop while focusing in the pharmaceutical retail section.
The truth is we have closed or opened dozens of stores every year, what’s important is we close less than we open new ones.
After 2019, FPT Retail will not open new mobile phone shops.
It is said the Long Chau pharmacy store system is about to change its name. Is that correct, Madam?
Ms. Nguyen Bach Diep: Previously in Ho Chi Minh City, Long Chau chain was quite well-known. Therefore we want to keep the brand name.
As for the newly opened stores, after the license for establising FPT Pharma takes effect, i.e. from January till now, there is the name FPT on store signs apart from the name Long Chau. We do not change our name, but we add in the name of a significant shareholder.
Why does FPT Retail choose the pharmaceutical retail section and the Long Chau chain to expand its fields of business? What is the current status of Long Chau chain?
Ms. Nguyen Bach Diep: When we were seeking new sections several years ago to expand our fields of business, we discovered potentials of the pharmaceutical retail section as its market were worth 4.5bn USD – equivalent to the smartphone retail section and there was no market leader to guide the market.
Each Long Chau store brings in about 3bn VND per month, while many stores of other chains reaches only 200 – 600 bn VND.
After that, we chose the Long Chau chain from a list of numerous retail chains because we were very impressed by the turnover of about 3bn VND/month each Long Chau store brought in, while a store of a different chain lies between 200mn and 600mn VND.
I cannot name enough reasons why Long Chau was such a “success”, as that is our business secret, but I can state some obvious details: Each Long Chau store has a humongous amount of medicines and functional food, which helps with catering for any customer’s needs.
After a year since implementation, we can disclose some outlines of FPT Pharma’s current status as follows: Each Long Chau store brings in an average monthly turnover of 1.6bn VND and reaches breakeven or profit after about 6 months. Before that, in every month we had to mobilize hundreds of millions of products with coming expiry dates. With technology in use, for each month we only need to mobilize dozens of millions of products with coming expiry dates.
Long Chau does sell special medicines, sell according to prescriptions and fill the customers’ requirements for minor ailments. However, our biggest turnover comes from the second source together with 4 main types of cardiovascular diseases – dyslipidemia/diabetes – mental illness – arthralgia. Of all the sections, the functional food has the highest profit margin.
I cannot name enough reasons why Long Chau was such a “success”, as that is our business secret
Why FPT Retail opened only nearly 20 Long Chau stores in 2018?
Ms. Nguyen Bach Diep: The first reason was we needed to find a right formula for opening new stores before doing a series of stores.
In 2018 we opened pharmacy stores at various locations to see which locations are most ideal for optimizing turnover and profit. For instance, the location inside FPT Shop with the advantage of no additional location costs or the location near markets, hospitals or crowded residential areas, etc. We have found the right formula for Ho Chi Minh City so we were confident to open a series of new stores.
In the future we will open stores in Bien Hoa of Dong Nai province, My Tho of Tien Giang province and have to keep on experimenting due to differences between provincial and Ho Chi Minh City markets.
Moreover, our team of location hunters underwent chaotic changes in 2018, hence the lower performance compared to the previous period. Things have settled down now so we are confident about opening new Long Chau stores as fast as planned to the number of 70 in 2019 and 700 in 2022.
According to you, the pharmaceuticals retail market has no leader for now. Not only FPT but also other players include Mobile World and Vingroup, etc. realize that. However, FPT, among those players, seems to be keenest on this section. While other competitors still refrain from going in full force, FPT has already opened stores after stores. It seems FPT is a step ahead of other competitors, doesn’t it?
Ms. Nguyen Bach Diep: Being a step ahead has disadvantages, though, the pioneer may win all or lose all. When a pioneer performs well, we are going to have a very big customer data file, which can be used for easy imprinting the brand name into customers and earning their trust. However, a pioneer also faces many risks on an untrod path, including accidents, a wrong turn resulting in a very dear price or even complete failure.
A follower has advantages a pioneer do not, for instance, the case of FPT Shop. Despite having been in the field for only 6 years, we have achieved great results thanks to learning from numerous mistakes made by enterprises in the same industry such as Mobile World, Viettel Shop and Vien Thong A, etc. The follower pays lower costs and goes faster.
Then do you believe Long Chau will win?
Ms. Nguyen Bach Diep: It’s hard to be certain about anything in business, but we believe in our direction after a while of experimenting and vigorously investing into the field.
Where are you at in pharmaceutical knowledge?
Ms. Nguyen Bach Diep: I understand the rules of operation and basic knowledge, but I can’t know all details of each medicine as Long Chau has a tremendous list of 6,000 products.
The important thing is that it takes only management capabilities to run the 2 chains of FPT Shop and Long Chau, despite the differences between the two sections, because of the similarity of 90% of work in running a trading chain model. For me, running Long Chau does not differ much from managing FPT Shop.
According Cafe F và Cafe Biz
FPT Retail and 1001 selling tactics to keep its growth rate at 20%: Boosting selling on credit and sales of accessories and SIM cards, testing 3 new projects concurrently
In order to maintain the 20% growth rate of profit after tax in the context of market saturation for mobile phones and Long Chau pharmacy store chain’s continued loss, FPT Retail employs numerous selling tactics to attract customers.
After 6 years of impressive growth thanks to being a follower, FPT Retail starts to face the other side of the coin. Upon the Company’s completion of its system chains build-up, the market stepped into saturation, which then pushed FPT Retail, a follower with no other choice, into quick hurdles of developing other retail sections in order to maintain the annual 20% growth rate of profit.
Similar to other retail chain businesses, the Company’s situation dictated a priority of market expansion over profit in the beginning. Therefore, the Long Chau pharmacy store chain will bear a 20bn loss in 2019 and only begin to profit from 2021 onwards as stated in the report of FPT Retail’s leadership in the Annual General Meeting of Shareholders held this morning of March 27.
In order to help FPT Retail safely go through the pivotal ahead, the leadership proposed many familiar yet creative selling tactics to help the Company maintain its 2-digit growth rate of both turnover and profit.
FPT Shop and 1001 selling tactics
In 2018, FPT Retail recorded a total turnover at 15,298 bn VND, up by 16% compared to 2017. Turnover from online trading reached 2,432bn, which recorded a rise by 21%. Profit before tax reached 435bn and profit after tax reached 348bn, up by 20% compared to 2017.
In the year 2019, FPT Retail aims to achieve 17,700bn in turnover and 428bn in expected profit after tax, which means a growth rate of 16% and 20% respectively compared to 2018.
According to the plan, this year will see FPT Retail boosting the implementation of F-Friend and Subsidy programs apart from increasing customer traffic both online on the website and offline at shops. These two sections are expected to bring in 1,875bn compared to 1,575bn in 2018.
In 2018, FPT Retail’s F-Friend program had 1 million blue collar customers from 2,500 factories. This year the Company will focus more on reaching white collars – office staff workers – from commercial and service enterprises. As for the Subsidy program, the Company plans to cooperate with Vinaphone, Mobifone and Vietnam Mobile in 2019 to jointly sell mobile phones accompanied by preferential service plans.
According to Ms. Nguyen Bach Diep, CEO of FPT Retail, there are two sections with abundant development ground for the Company: upgrading products through selling on credit and selling accessories and SIM cards.
The turnover from credit-based selling currently accounts for only 32% in FPT Shops’ total turnover, while the ratio is up to 50% at other enterprises in the same industry. The credit-based trading will contribute 45% in FPT Shops’ total turnover in 2019. In order to control bad debts, FPT Retail will utilize various technologies to evaluate more accurately customers’ financial capabilities and credibility points.
The section of phone accessories and SIM cards at FPT Shops has long been overlooked by FPT Retail, while this section is highly profitable. Therefore, FPT Retail sets the target turnover of 1,000bn VND from selling phone accessories and if things go as planned, the profit will be about 100 bn, up by 67% compared to 2018.
The impressive figures stated above are thanks to FPT Retail’s thorough preparation for “The 1,000bn campaign” after negotiating with overseas suppliers, which lowers the import price by 20% compared to previous prices. On that ground, despite selling at very competitive prices, FPT Retail can still achieve a 10% profit compared to previous prices.
With such 1001 selling tactics being implemented in 2019, it is obvious the Company is striving to satisfy every need of consumers from all social classes. Customers can always find items they need in FPT Shop.
Long Chau is a story of the future
Long Chau pharmacy store chain has 22 stores, 20 of which are located in Ho Chi Minh city and Bien Hoa. However, the turnover of the chain is not accounted in the total turnover in 2018. In 2019, FPT Retail will open 50 new stores in Ho Chi Minh City as well as many other provinces nationwide. The turnover from these will be about 500bn VND, while loss is expected to be about 20 bn VND.
According to Ms. Nguyen Bach Diep, Long Chau is a story of the future. In the plan presented at the General Meeting of Shareholders, the number of stores will rise to 217 in 2020 and 700 in 2022. Accordingly, Long Chau chain will break even in 2020, make a profit of 62 bn VND in 2021 and 193bn VND in 2022.
Being a new player in the pharmacy retail industry, FPT Retail experimented various business models in 2018 with a focus on locations which can attract most customers once the store is opened. They have discovered the right model, hence the bold acceleration of market expansion.
Also according to Ms. Diep, if the development of Long Chau pharmacy store chain gets into orbit in the time to come, FPT might as well embark on pharmacy distribution and manufacturing industries.
3 projects in test
For the time being, FPT Retail’s two main retail sections are electronic devices and pharmaceuticals. However, they do not limit themselves in those sections only. As Ms. Diep has shared, this Company will invest into any retail section with high profit.
FPT Retail is currently cooperating with partners to test 3 projects simultaneously, which will be made public once experimentations prove successful. However, the CEO would not disclose which retail section.
According to Linh Dan, Cafebiz