Operating since the mid-1950s, Vietnam’s SonKim Group has undergone multiple transformations to support the company’s ambition over the years. The establishment of SonKim Land signaled the conglomerate’s commitment to becoming a leader in the luxury real estate market, while recent big bets on the retail industry saw the company setting aside a sizeable fund for SonKim Retail – an integrated platform for diverse consumer goods and services.
The investment is earmarked for building a retail system across multiple business segments, including CVS, fashion, restaurants and spa business. The arrival of GS25 convenience stores and the launch of Watami, a chain of Japanese restaurants, marks the first phase of SonKim’s retail ecosystem’s growth acceleration and its Saigon footprint expansion.
In penetrating the saturated F&B and fashion retail industry in Vietnam, SonKim Retail has adopted a flexible and deliberate strategy in terms of partnerships and investment. To learn more about the company’s expansion strategy, Vietcetera turns to Phi Nguyen, the CEO of SonKim Retail.
Can you tell us about yourself and your role at SonKim Retail?
I come from a traditional Hue Vietnamese family that migrated to the United States in 1975. After graduating from a college in the States, I was brought back to Vietnam as an Expat employee working for Intel Corporation. And I fell in love with Vietnam, as cliché as it sounds.
Working first for Intel and then BlueScope in Vietnam, I realized that a career at a multinational corporation was the same experience regardless of which countries I worked in. I was much more attracted to the idea of helping a Vietnamese founder-led company transition to becoming a professional enterprise that can compete internationally.
That career-changing realization led to a string of management roles at Vietnamese companies operating in media, F&B, manufacturing, technology and investment. Accepting the job as the CEO of SonKim Retail felt like a natural progression and the perfect fit for my skills as it requires a breadth of knowledge across multiple industries.
As the CEO of SonKim Retail I oversee the operations of over 15 brands — including fashion outlets such as Vera and Jockey, and restaurants such as Mama Sens and Jardin des Sens. On the business development side, I am always on the lookout for investment opportunities in brands that will help SonKim Retail achieve its goal of becoming a household name in Vietnam.
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Can you tell us about SonKim Retail’s role within SonKim Group?
Today, SonKim Group is a big corporation that started out in 1957 as a garment manufacturing enterprise. The biggest financial value is created by SonKim Land, the flagship brand part of SonKim Group. In comparison, SonKim Retail is still a startup, yet one that has the greatest strategic potential thanks to its ability to touch the lives of all Vietnamese people, whereas SonKim Land can only touch a segment.
I'm really excited about spearheading the efforts of turning SonKim Retail's vision into reality — making it possible for every Vietnamese to experience our version of a modern lifestyle.
What are SonKim Retail’s mission, vision and strengths?
SonKim Retail's mission is to inspire young people to be who they want to be. In doing so, we hope to become Vietnam’s preeminent lifestyle influencer.
We deliver on that mission by continuously improving on the fundamentals of our operations — this is something companies do not often talk about because it's not sexy or exciting, but it's extremely important.
When you have a large-scale operation like SonKim Retail, you have to focus on the supply chain, the manufacturing process and the last-mile delivery. SonKim Retail has hundreds of outlets, from fashion and convenience stores to restaurants — all of them are connected and only scalable because of the investments SonKim Retail has made towards our supply chain, distribution process and business intelligence.
Understanding trends is also one of SonKim Retail’s strengths. We understand which restaurant concepts are drawing huge crowds, which fashions are in demand, and which snacks children want to see in our convenience stores.
The ability to understand Vietnamese consumers, backed by our robust supply chain, focus on quality and customer service makes us stand out from our competitors.
What factors does SonKim Retail consider when choosing its strategic partners?
I look for companies that have strengths where we have weaknesses, and whose weaknesses can be covered by our strengths. For example, since most of our retail outlets operate in tier 1 cities, SonKim Retail is looking for partners with stores in smaller cities like Quy Nhon and Can Tho that will allow us to expand our distribution channels.
Following the same logic we brought Vera, a female lingerie line, and Jockey, a male undergarment line, under our SonKim Mode store concept. This strategic partnership allowed us to combine resources, compound our strengths and consolidate our position in Vietnam’s undergarment market.
What is the COVID-era reality like for integrated retail platforms like SonKim Retail?
Like most industries, retail is undergoing a consolidation phase. Many companies are going out of business because they are struggling to maintain sales volumes or to fulfill customers' orders. One way to keep your business afloat is through a merger which allows both companies to combine customer data-base, human resources, financial and capital assets with your one-time competitor.
I predict a wave of consolidations over the next six months. At SonKim retail, we're also looking for potential mergers and acquisitions and new partners.
Internally, since the start of the pandemic, it's not business as usual. At SonKim Retail, we have fully embraced the new reality and adjusted our management style accordingly. Whilst our retail stores are operating as normal at the moment, we have plans for different scenarios, especially in the unfortunate case where Vietnam will be hit by a second wave of infections.
SonKim Retail new Thao Dien Complex. What is unique about this complex and retail model?
Thao Dien Complex will be our first Urban mini-mall, a community space right in the heart of Thao Dien, with convenient facilities and amenities customers may want.
At the very entrance to the complex is a GS25 convenience store where you can stock up on your groceries and enjoy fresh foods. Around the corner is Mama Sens, a restaurant that brings authentic Mediterean food to Saigon. Up a flight of stairs you will find HealthSpa and Watami, a Japanese grill and sushi restaurant.
At SonKim Retail, our hope is that the Thao Dien Urban Complex model can be replicated across the country, and that one day it will be present in every neighborhood. Our ambition is for SonKim Retail Urban Complexes to become woven in the very fabric of Vietnamese life and society.
The strategy of investing in integrated spaces will allow us to optimize our operation. Simply put, it is easier to oversee multiple businesses when they are located in one space.
What are SonKim Retail’s expansion and growth plans?
SonKim Retail’s plans differ across each business platform.
When it comes to our fashion stores, we are opening fewer new outlets. However, we are still investing, having shifted the focus from opening new stores to offering more products at our existing locations. Similarly, our F&B strategy focuses on merger and acquisition opportunities rather than opening new locations.
For GS25, our flagship chain of convenience stores, we are accelerating our expansion. The reason being is that no matter the situation, even with an imposition of a lockdown, the convenience stores will remain open as they provide essential services. Not to mention that the retail real estate market has ‘soften' since the start of the outbreak, with affordable prime locations up for grabs.
Lastly, for our TV shopping network, VGS, we are investing in our e-commerce platform and looking into building a distribution center that is connected to and can deliver to all major and secondary cities.
I would like to stress that these are our short-term plans due to COVID-19. When world leaders get the pandemic under control and the economy starts to pick up, SonKim Retail will resume our long-term business strategy to open more fashion stores and restaurants and expanding rapidly throughout Vietnam and overseas.