Sat. Apr 13th, 2024

VietNamNet Bridge – Displaying goods at supermarkets is the quickest way for
manufacturers to develop their brands and expand the distribution networks.
However, it’s not easy to squeeze into supermarkets where the space for product
display is limited.

 

Vietnam, supermarket, private brand, development, retail premises

Though understanding that doing the outsourcing for supermarkets would put big
difficulties for their own brands, manufacturers still have to “leap in the
dark.” If they make products for supermarkets’ private brands, they would be
able to enjoy some advantages. And if they don’t, they would not be able to
display their products at supermarkets, or have to bear very high fees to put
their products on the shelves there.

The owner of a garment company who asked to be anonymous, related that she once
refused to make products for a supermarket. The distributor later outsourced to
another garment company and sold the products at the prices 15-20 percent lower
than her company’s prices.

The supermarket also became uncooperative by displaying her company’s products
at disadvantageous positions. This then led to the sharp fall of the company’s
sales.

Due to the sharp fall in the sales, the company had to take back its products
from the supermarkets. She was told that if she accepted to make products for
the supermarket, her company would be required the discount of 10 percent
instead of 30 percent, and the company’s products would be displayed at good
positions.

A senior executive of SG Food also said its products were once displayed at
disadvantageous positions, but since the day SG Food accepted to do the
outsourcing for supermarkets, it has got a lot of preferences.

Making products for supermarkets is not the thing manufacturers want, but this
is really a profitable choice.

Dish washing liquid, detergent products that bear supermarkets’ private brands
such as Co-op Mart, Big C or Metro have been recently made by Lix Company. With
the big orders from the distributors who pay money on deliveries, Lix has been
earning big money and living well. However, analysts have noted that the
products bearing Lix brand have gradually disappeared from the shelves of the
supermarkets.

“Supermarkets’ products with private names don’t compete directly with the
company’s products. However, if enterprises focus on making products for
supermarkets, they would eliminate their products from the supermarkets
themselves,” said Le Thanh Lam, Deputy General Director of SG Food, explaining
that with the limited area for displaying goods, supermarkets would reserve
space for their products instead of other manufacturers’ products.

Therefore, Lam said, SG Food has reduced the outsourcing proportion from 65
percent to 50 percent.

The general director of a chocolate company in district 1 in HCM City, said it
is very difficult to have somewhere to display goods at supermarkets.

The director refused to make products for the supermarkets; therefore, he has to
pay high fees to put his goods on the shelves there. Metro, for example, has 19
supermarkets throughout the country, and each of which has its own birthday. In
general, his company has to pay VND20 million for every birthday.

The director has revealed that he has to pay VND120 million a year in fees. If
noting that every supermarket has 5.000 suppliers, the supermarket can then
collect VND600 billion from fees. As such, the fees alone allow them to live
well.

NCDT

By vivian