1

FOREIGN TRADE UNIVERSITY

FACULTY OF BUSINESS ADMINISTRATION

GRADUATION REPORT

Major: INTERNATIONAL BUSINESS MANAGEMENT

DEVELOPING THE RETAIL ACTIVITIES AT HA

TINH BOOK AND EQUIPMENT EDUCATION JOIN

STOCK COMPANY (HBE)

Student name : Duong Duc Tung

Student code : 1001020172

Class : A1 – High quality class

Intake : Course 49 – Faculty of

Business

Administration

Supervisor : Ms. Nguyen ThuyAnh, PHD

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Table of content

List of tables .................................................................................................................... 4

List of charts ................................................................................................................... 4

List of abbreviation ........................................................................................................ 5

Chapter 1 Introduction .................................................................................................. 6

1.1 Research Background .......................................................................................... 6

1.2 Research Objectives ............................................................................................. 7

1.3 Research Tasks ..................................................................................................... 7

1.4 Research Methodology ........................................................................................ 7

Chapter 2 Literature Review ........................................................................................ 8

2.1 The definition of retailing .................................................................................... 8

2.2 The roles and purposes of retail activities ......................................................... 8

2.3 The types of retail activities ................................................................................ 8

2.4 The Retail Theories ............................................................................................ 10

2.4.1 Central place theory ....................................................................................... 10

2.4.2 Supply chain theory ....................................................................................... 12

2.4.3 Merchandise placement theory. .................................................................... 13

Chapter 3 Fact of retail activities of HBE .................................................................. 16

3.1 Overview of HBE ............................................................................................... 16

3.1.1 Establishment and development of HBE ...................................................... 16

3.1.2 Organizational structure of HBE .................................................................. 19

3.1.3 Financial situation of HBE ........................................................................... 21

3.1.4 Significant achievements of HBE ................................................................. 25

3.2 Overview of Vietnam Retail Market ................................................................ 26

3.2.1 Vietnam’s Retail Industry and the Cases from Giant Retail Brands .......... 26

3.2.2 The Situation of Book and Equipment Retail Market in Vietnam .............. 30

3.3.1 Infrastructure ................................................................................................. 32

3.3.2 Human resources ........................................................................................... 33

3.3.3 Logistic System............................................................................................... 35

3.4. Evaluate the situation of retail activities of HBE ........................................... 36

3.4.1 Strengths ........................................................................................................ 36

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3.4.2 Weakness ........................................................................................................ 36

Chapter 4 Recommendations for developing retail activities in HBE .................... 38

4.1 Corporate with other local retailers in order to improve financial

capability and logistic systems .................................................................................... 38

4.2 Enhancing Customer Service ............................................................................ 39

4.3 Creating an appealing store atmosphere ......................................................... 40

4.3.1 Lighting .......................................................................................................... 41

4.3.2 Highlighting Merchandise ............................................................................ 41

4.3.3 Energy-Efficient Lighting ............................................................................. 42

4.3.4 Color ............................................................................................................... 42

4.3.5 Music .............................................................................................................. 42

4.3.6 Scent ............................................................................................................... 42

Chapter 5 Conclusion................................................................................................... 43

References ..................................................................................................................... 44

Appendices .................................................................................................................... 46

HBE’s human resources qualifications .................................................................. 46

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List of tables

Table 1 : HBE’s organization structure 18

Table 2 : Revenue of HBE from 2010 – 2013 22

Table 3 : Profit of HBE from 2010 -2013 23

Table 4 : Asset of HBE from 2010-2013 24

List of charts

Chart 1 : Revenue growth of HBE from 2010 - 2013 22

Chart 2 : Profit growth of HBE from 2010-2013 23

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List of abbreviation

AFTA ASEAN FREE TRADE AREA

GDP GROSS NATIONAL PRODUCT

GRDI GLOBAL RETAIL DEVELOP INDEX

HBE HA TINH BOOKS AND EQUIPTMENT EDUCATION JOIN STOCK

COMPANY

IMF INTERNATIONAL MONETARY FUND

IGD THE INITIATIVE FOR GLOBAL DEVELOPMENT

SCM SUPPLY CHAIN MANAGEMENT

WTO WORLD TRADE ORGANISATION

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Chapter 1 Introduction

1.1 Research Background

In any economy, retail activities always play a very foundation and

beginning role of exchanging commodities process, encouraging consumption and

creating added values, growth for any countries. It is possible to compare retail

activities as the back bones of the whole economy. The back bones must stay strong

then the body would have developed sustainable.

In normal life, we could see the retailing existing anywhere around us

without us realizing. In the morning village market, we can see many women riding

bicycles with some kilogram of mango, watermelon, bananas… or a man with a

table full of pork, cow…or an elder with a pack of tea leafs, few rolls of vegetables

harvesting from their own garden.

In company store level, retail activities is the direct way to supply goods and

commodity to consumers, which helps customers realize brand name, trade mark

and is the very first step to generate profits for company. But how to develop a

suitable retailing model for the products of company, as well as analyze the impact

of these model on the effective of company operation.

Since I always feel attracted to books and retailing, and by the way talking

about books, from my point of view, books contain the unlimited knowledge, all of

the mind of wises man all over the world from past to present, it is the precious

material which helps self-study if we know the way to use it. Books help open our

mind, calm the helpless soul, erase the evil in each of us and spread the emotion…

with books, the life is become easier, worth living and everything becomes clear.

That’s why, in this graduate report, I choose the topic: “Developing the

retail activities at Ha Tinh Book and Equipment Join Stock Company”. I hope

I could apply the knowledge that I gain during school time as well as these I absorb

myself from society to discover more deeply about this topic, and find out how to

apply the results from this research in to the real life.

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I am truly indebted to Ms. Nguyen Thuy Anh, PHD who has helped and

encouraged me from the very first step of the report. Within my limited knowledge

and difficulties in filing materials for new topic, mistakes and faults are

unavoidable. Therefore, I appreciate all the comments from readers to improve my

report.

1.2 Research Objectives

I desire to achieve the following objective: Finding out the solution to which

improve retail activities in HBE within their limited sources in order to increase

company’s profit.

1.3 Research Tasks

I have been wondering so many issues about retail activities. Since the time

and my ability are limited, I would hope to clear some following questions:

- What is the insight of retail activities?

- What is the definition of retailing?

- What are the roles and purposes of retail activities?

- How many types of retail activities?

- How to improve retail activities at retail store?

- How do the situation of retail activities in HBE, as well as Vietnam retail

market look like?

- What are strengths and weakness of HBE’s retail activities?

- What are opportunity and threats toward HBE’s retail activities?

- What could be made to improve the retail activities of HBE?

1.4 Research Methodology

My research methodology requires gathering relevant data from the specified

documents and compiling databases in HBE in order analyze the material and arrive

at a more complete understanding of the situation of HBE.

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Chapter 2 Literature Review

2.1 The definition of retailing

“Retailing is the set of business activities that adds value to the products and

services sold to customers for their personal or family use. Often people think of

retailing only as the sale of products in stores, but retailing also involve the sale of

services such as overnight lodging in a motel, a doctor’s exam, a haircut, a DVD

rental, or a home-delivered pizza. Not all retailing is done in stores.” (Michael Levy

& Barton A.Weitz, p.6)

2.2 The roles and purposes of retail activities

In the value chain, the retailer is the final link connecting the producers to

consumers. Retail activities are often aimed at three mains purposes:

Firstly, sales function – it means put the products to consumers.

Secondly, use point of retail as a communication channels to interact with

consumers.

Thirdly, do verifiable price channel and product quality for customer

services.

2.3 The types of retail activities

Mom-And-Pop Stores: is a retail outlet that is owned and operated by

individuals. The range of products are very selective and few in numbers. These

stores are seen in local community often are family-run businesses. The square feet

area of the store depends on the store holder.

Specialty Stores: A typical specialty store gives attention to a particular

category and provides high level of service to the customers. A pet store that

specializes in selling dog food would be regarded as a specialty store. However,

branded stores also come under this format. For example if a customer visits a

Reebok or Gap store then they find just Reebok and Gap products in the respective

stores.

Department Stores: often bear a resemblance to a collection of specialty

stores. A retailer of such store carries variety of categories and has broad assortment

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at average price. They offer considerable customer service. For example: Food

World in Bangalore.

Discount Stores: offers extensive assortment of merchandise at affordable

and cut-rate prices. Normally retailers sell less fashion-oriented brands. However

the service is inadequate.

Convenience Stores: is essentially found in residential areas. They provide

limited amount of merchandise at more than average prices with a speedy checkout.

This store is ideal for emergency and immediate purchases.

Hypermarkets: provides variety and huge volumes of exclusive

merchandise at low margins. The operating cost is comparatively less than other

retail formats.

Supermarkets: is a self-service store consisting mainly of grocery and

limited products on nonfood items. They may adopt a Hi-Lo or an EDLP strategy

for pricing. The supermarkets can be anywhere between 20,000-40,000 square feet.

Malls: has a range of retail shops at a single outlet. They endow with

products, food and entertainment under a roof.

Category Killers or Category Specialist: By supplying wide assortment in

a single category for lower prices a retailer can "kill" that category for other

retailers. For few categories, such as electronics, the products are displayed at the

center of the store and sales person will be available to address customer queries

and give suggestions when required. Other retail format stores are forced to reduce

the prices if a category specialist retail store is present in the vicinity.

E-tailers: The customer can shop and order through internet and the

merchandise are dropped at the customer's doorstep. Here the retailers use drop

shipping technique. They accept the payment for the product but the customer

receives the product directly from the manufacturer or a wholesaler. This format is

ideal for customers who do not want to travel to retail stores and are interested in

home shopping. However it is important for the customer to be wary about

defective products and non-secure credit card transaction. Example: Amazon and

EBay.

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Vending Machines: This is an automated piece of equipment wherein

customers can drop in the money in machine and acquire the products. This kind of

system is currently not widely used in India. For example: Soft drinks vending.

Retailers can opt for a format as each provides different retail mix to its

customers based on their customer demographics, lifestyle and purchase behavior.

A good format will lend a hand to display products well and entice the target

customers to spawn sales. ( Thejeswini. G, 2010)

2.4 The Retail Theories

Retailers achieve their financial objectives by effectively managing their five

critical assets: locations, merchandise inventory, stores, employees, and customers.

Beside, retailing activities including many activities as specified follow:

1. Merchandise management involves

Managing the merchandise planning process

Buying merchandise

Retail pricing

Planning retail communication program

2. Store management involves

Managing the store

Store layout, design and visual merchandising

Customer services

In this study, I will only focus on the three theories that are most relevant to

the three factors that affect retail activities. That is location, merchandise inventory

and stores.

2.4.1 Central place theory

Retailing is a highly location-sensitive economic activity. Due to the nature

of the transactions carried out in various types and sizes of stores, they are likely to

be found in regional centers (urban cores) or in close proximity to such centers.

Where proximity to demand and being located within a retail cluster are crucially

important for an individual shop, the high rental costs in such places produce an

aversive impact. Where proximity to demand and being located within a retail

cluster are crucially important for an individual shop, the high rental costs in such

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places produce an aversive impact. We all know that stores with large establishment

sizes, which also often sell durables for less frequent purchase, are more likely to be

located further from the core of the retail cluster. Meanwhile, the retail cluster in the

urban core is more likely to be occupied by small-scale stores and/or downtown

shopping centers where several shops are nested together. Nevertheless, it is an

acknowledged fact that stores are not distributed across space randomly. One

important about spatial regularity in the retail industry is that many retail services

are likely to be located close to each other. This co-location phenomenon in

retailing is driven by consumers’ as well as suppliers’ desire to have a critical mass

of shops in a marketplace. Also, for a store, being located close to different and

similar kinds of retailing activities is necessary for survival due to

complementarities between the retailing services. (Johan P.Larsson & Özge Öner ,

2014).

Choosing a particular location type requires evaluating a series of trade-offs.

These trade-offs generally involve the size of the trade area, the occupancy cost of

the location, the pedestrian and vehicle customer traffic generated in association

with the location, the restrictions placed on store operations by the property

managers, and the convenience of the location for customers. The trade area is the

geographic area that encompasses most of the customers who would patronize a

specific retail site. (Michael Levy & Barton A.Weitz, 2011, pp.168).

Considering the focus of this study, the most relevant theories are the

‘central place theory’ of Christaller (1933) and its later extensions, which

specifically deal with retail location. In fact, the use of central place theory for retail

can be traced back in history in many countries with strong retail planning

traditions, like Sweden and the UK (Dawson, 1980; Sparks & Dawson, 1989).

According to the theory, the demand at any location is expressed roughly as the

number of consumers within a large area. This very basic idea of spatial demand

allows one to map a retail center by taking the surrounding geography into account.

The intuition behind the use of this theory for retail location investigation is that in

each location it is possible to describe a spatial dimension of consumer demand,

which attenuates as we move outwards from the location in question. Thus, the

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demand is not uniform but subject to distance decay. This decline in potential

demand with increasing distance is due to consumers’ decreasing willingness to

travel greater distances. This phenomenon is referred to as a spatial demand cone by

Lösch (1940), and Huff (1964) explicitly discusses the decreasing shopping

probabilities radiating outward from a center in his work.

Central place theory suggests that cities are connected in systems of cities

and that they are hierarchically ranked, a proposition that is extensively analyzed in

the rank–size literature. Large cities are likely to be closely linked to cities of a

smaller size, and they are also likely to influence the growth of the smaller places

connected to them. This type of hierarchical order that we observe for cities is in

fact very similar to the hierarchical order between different retail markets. By

dividing the trading areas into separate hierarchical circles of demand, Applebaum

and Kaylin (1974) distinguish between a primary area where the demand is at its

highest level, secondary areas where the demand is lower and a peripheral ring

where consumers have a tendency to shop elsewhere. (Johan P.Larsson & Özge

Öner, 2014).

2.4.2 Supply chain theory

Retailers are the connection between customers and product manufacturers.

It is the retailers’ responsibility to gauge customers’ wants and needs and work with

the other members of the supply chain—distributors, vendors, and transportation

companies—to make sure the merchandise those customers want is available when

they want it.

Supply chain management is a set of activities and techniques firms employ

to efficiently and effectively manage the flow of merchandise from the vendors to

the retailer’s customers. These activities ensure that the customers are able to

purchase merchandise in the desired quantities at a preferred location and

appropriate time. Retailers are increasingly taking a leadership role in managing

their supply chains. When retailers were predominantly small businesses, larger

manufacturers and distributors dictated when, where, and how merchandise was

delivered.

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But with the consolidation and emergence of large, international retail

chains, retailers now play an active role in coordinating supply chain management

activities. The size of these international retailers typically makes them more

knowledgeable and powerful than their vendors and thus better able to control their

supply chains. Retailers are in a unique position to collect information about

customer shopping behavior and purchases. This information is being shared with

suppliers to plan production, promotions, deliveries, assortments, and inventory

levels. Efficient supply chain management is important to retailers because it can

provide a strategic advantage that increases product availability and an inventory

turnover that produces a higher return on assets. (Micheal Levy & Barton A.Weitz,

2011)

In this conceptual, with the purpose of this study, we will look more deeply

into a concept named outsourcing logistics.

Outsourcing Logistics

To streamline their operations and make more productive use of their assets

and personnel, some retailers outsource supply chain functions. Many independent

companies are very efficient at performing individual activities or all the supply

chain activities. There are a large number of companies that can transport

merchandise from the vendor to distribution centers or from the centers to the

retailer’s stores. Rather than owning warehouses to store merchandise, retailers can

use public warehouses that are owned and operated by an independent company.

Rather than outsource specific activities, retailers can use freight forwarders

to arrange for the storage and shipping of their merchandise. Freight forwarders

usually provide a full range of services including tracking inland transportation,

preparing shipping and export documents, warehousing, booking cargo space,

negotiating freight charges, consolidating freight, insuring cargo, and filing

insurance claims. (Michael Levy & Barton A.Weitz, 2011)

2.4.3 Merchandise placement theory.

Some store design objectives are to (1) implement the retailer’s strategy, (2)

build loyalty by providing a rewarding shopping experience, (3) increase sales on a

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visit, (4) control costs, and (5) meet legal requirements. (Michael Levy & Barton

A.Weitz, 2011)

There are many different floor designs in grocery and department

stores today. Many of these designs are carried over from previous years, and have

nothing to do with how consumers shop. This is not just a U.S. phenomenon, as

many businesses in many countries set stores up with the same traffic pattern in

mind. These practices typically involve placing higher-frequency products near the

back of the store, with low-margin merchandise on the perimeter and higher margin

goods near the center. There is a science to some of this, but old methods seem to

prevail against science. There have been many studies carried out, predominantly

by the consumer packaged goods companies, on what shelves to put products on

(high shelf versus low shelf). One inherent problem is that these packaged goods

companies are responsible for only a small amount of merchandise in a store and

have little say regarding what counter the product sits on, only where it sits within

their small area. All store designs are intended to alter or force a particular

consumer traffic pattern within a store. The grocery store industry goes to great

lengths to set predetermined traffic patterns, all with the hope of building bigger

baskets. There are some newer specialty chains that have designed destination

departments within their stores (mobile phones, computers, appliances, and flat-

screen televisions). These departments are heavily signed as you come into the store

and guide the consumer to the area they are interested in. These stores are built on

service and cross selling, the art of selling other items related to the primary item

(for example, expensive cables that go with the flat screen TV).

Old Theories of Merchandise Placement

Some theories seem to live on forever. Many supermarkets even today will

put eggs, milk, and most dairy products in the location farthest from the front

entrance. The reasoning is simple: Make consumers past as much merchandise as

possible so they will pick up more stuff. Although this seems logical, it is not

always the case. This rule started (and was widely used) back in the 1940s and

1950s and has been used ever since. It was common back then to have single-

income households, so time was not as critical and limited a resource for the

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shopper as it is today. In the 1950s, shopping, even for groceries, was a pleasant

afternoon trip, not an exercise in time management. This was a family trip, with the

kids included. The grocers would plan the design of the store knowing that the

family would be spending time in each aisle. Products that occurred most frequently

on shopping lists would be placed near the back, with aisles designed to make you

wander the store. Retailers didn’t want shoppers to have a direct path to the items,

but forced them to go down certain aisles, just to remind them of other

products they may have left off their shopping lists. This method worked well, and

is still being used today in many locations. The longer you stay in the store, the

better the chance you will pick up those items you didn’t intend to buy when you

came in. These are not necessarily impulse items, but could be additional dinner

side dishes, a new type of pasta, or an end-cap special promotion.

New Theories of Merchandise Placement

In the mid-1990s and early 2000s, many research firms posted studies about

the ever-shrinking hour. The emphasis everywhere was on time management, with

the ever-increasing trend toward dual-income families. Shopping began to be a

necessity, not an enjoyable pastime. Retail organizations began to develop stores

with smaller footprints, where the selection was smaller but the emphasis was

on convenience. Neighborhood markets were being opened up wherever space was

available. Gas stations added food to the line of goods sold along with cigarettes in

their now increasing C-channel (convenience store) locations. These new channels

were big moneymakers, taking sales and margin from grocery stores and mass

merchandisers alike. Again, the new designs were based on the time pressures these

new families were under, convenience was the goal, and consumers were willing to

pay more for this, hence the term time value of time.(Emmett Cox, 2012)

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Chapter 3 Fact of retail activities of HBE

3.1 Overview of HBE

3.1.1 Establishment and development of HBE

Overview of HBE

Name: HATINH EQUIPMENT BOOK AND EDUCATION JOINT STOCK

COMPANY

§ Abbreviation: HTBEEC0

§ Stock Code: HBE

§ Head Office: 58 Phan Dinh Phung Street, Ha Tinh city, Hatinh Province

§ Phone: 0393. 893 399

§ Fax: 0393. 852 352

Scope of business:

Selling education books, textbooks, journals, maps, writing paper, all

kinds of VPP and publications

Producing Joint Venture types of school equipment; printing documents,

records, books and serving the education sector

Buying, selling and consigning goods, commercial brokerage;

Travel, restaurants, refreshment.

Joint training, professional training in the fields of library, school

equipment, Business Administration, Finance and Accounting, Computer Science;

Foreign Languages

Training Professional Director; Provide legal advices in the areas: labor

safety, service tax; Vocational and technical composite

Real estate office; consulting study.

School services.

The History of Establishment

The predecessor of the company HTBEECO Books - Ha Tinh School was

established in November 1991 under the state enterprise model, under the

Department of Education - Training in Ha Tinh province.

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On 11/12/2004 : Company moved from state enterprise model into a joint

stock company under certificate of business registration of joint stock company

number 2803000151 issued by the Department of Planning and Investment of Ha

Tinh, first registration date November 12, 2004 . The company moved into the

enterprise directly under the People's Committee of Ha Tinh province with an initial

charter capital of VND 1.25 billion.

In 2005, the charter capital increased to VND 2,250,000,000. In 2006, the

charter capital increased to VND 6,000,000,000. In 2008, the charter capital went

up to VND 10,000,000,000. And by 2010, which is VND 22.31058 billion charter

contract. (Source: HBE’s financial statement, 2010)

Listed shares in the Securities Trading Center in Hanoi on 22/02/2008.

Development Strategy

The main objective of the company: Developing with stable growth rate,

doing business effectively by increasing profitability and economic benefits for

investors, creating jobs and maintaining income of workers, perform better tax

policy for the state. (Source: HBE’s Website http://hbec.com.vn/hbec/vi/)

Subsidiaries

HBE Educational Co., Ltd. established on 05/06/2012 with charter capital

of VND 13.5 billion by the parent company holds 100% of the charter capital.

HBE Trade Co., Ltd. established on 11.13.2012 with charter capital of 4.5

billion contracts with the parent company holding 100% of the charter capital.

HBE Aggregate Distribution Co., Ltd. founded on 03/01/2013 4.35 billion

contract with a charter capital; in which, the Company undertakes to contribute

2.784 billion dollars east, respectively 64% rate of capital. The company was

dissolved on 09/30/2013.

(Source: HBE’s financial statement, 2013)

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HBE

General Meeting of Shareholders

Board of Management

Board of Directors

General Director

Deputy General Director

Accounting department

Business planning

department

Organized and administrative

department

Legal department

Retailing department

Supervisory Board

Table 1: HBE’s organization structure

Source: HBE’s Database

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3.1.2 Organizational structure of HBE

The management structure of Company

§ General Meeting of Shareholders: Including all shareholders with voting

rights, is the highest authority of the company and decide the issues in term of law

and charter provisions. Specifically, the shareholders will approve the annual

financial statements of the Company and the financial budget for next year.

§ Board of Management: The management agencies which have full

authority to represent the company to decide all matters relating to the purposes and

interests of the Company, except for those matters within the competence of the

General Assembly Shareholder. Board of Directors is responsible for supervising

the CEO and other managers. The rights and obligations of the Board of Directors

are regulated by law and charter, the internal regulations of the Company and the

Shareholders' Meeting Resolution Provisions.

§ Supervisory Board: The agency under the Shareholders' General Meeting

which is elected by General Meeting of Shareholders. Supervisory Board is

responsible for checking the reasonableness and legality of business operations,

financial statements of the Company. Supervisory Board operates independently to

the Board of Management and the Board of Directors.

§ Board of Directors

1 - General Director

General Director is the legal representative of the Company in conducting all

business activities. General Director are appointed and dismissed by the Board of

Management and he/she is not necessarily a member of shareholders and could be

the member of Board of Management. General Director is responsible to the Board

of Management and the law in term of Business Operation Effective.

2 - Deputy General Director

The Deputy General Director has missions to assist the General Director in

term of activities in areas as assigned and authorized by the General Director and

responsible to the General Director and the law in assigned and authorize tasks.

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§ Advice Block: Including the departments, unit members, and the board

which has the function of advising and assisting the Board of Directors, directly

operating expertise and functional direction of the Board of Directors. Advice Block

of the Company consists of department, the unit member function is specified as

follows:

1 - Business Planning Department:

Business Planning Division has the following functions:

Organizing business plans under the categories of business of the Company

Planning to Supply materials for Equipment education and Toys

manufacture.

Giving guidelines at selling commodities of Trading Company and General

Services.

Organizing joint trainings

Collecting Debts

2 – Accounting Department

Accounting Department has functions to implement the company’s financial

regulations and account proactive capital supply -demand business plan aimed at

developing production and building infrastructure for the company.

Chief Accountant has duty to assist the General Director in term of directing

and organizing the implementation of accounting and finance of the Company

under the provisions of law.

3 - Organized and Administrative Department

Organized and administrative department shall assist the Company’s leaders

and its affiliated entities in term of the management staff, the administrative work.

In addition, the department's function is to make car rental services while operating

freight cars and ensure the best facilities to the Company. The department

cooperating with Department of Accounting managing company’s assets and

Appraising shopping facilities.

4 – Legal Department

Legal department shall assist the Company’s leaders and its affiliated entities

in term of the legal advices and the legal work.

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(Source: HBE’s Website http://hbec.com.vn/hbec/vi/)

5 – Retailing department

Retailing department has the following functions:

Controlling retail activities of HBE.

Organizing market exploration and customer care.

Selling goods and commodity of HBE at the retail outlet.

3.1.3 Financial situation of HBE

Finance always plays an important role to corporation. In fact, the weak

points of Vietnamese retailers in general as well as HBE is the capital and business

strategies usually only up for a short-term.

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The business activities result of HBE from 2010-2013

Table 2: Revenue of HBE from 2010 – 2013(VND 10 BILLION)

2010 2011 2012 2013

Q1

3,08 4,01 3,81 4,50

Q2

13,31 14,01 18,95 7,78

Q3

20,27 26,01 23,74 17,65

Q4

10,77 10,37 10,27 9,04

Total

47,43 54,4 56,77 38,97

(Source: HBE’s Financial Statement 2010-2013)

Chart 1: Revenue growth of HBE from 2010 - 2013

From 2010 to 2013, the overall trend of revenue is increasing. In 2010, the total

revenue is VND 470,43 billion and the year later it increase to VND 540,4 billion in

2011 and went up to VND 560,77 billion in 2012. Within 2 years the revenue had

been increased nearly VND 100 billion. But in 2013, there is a huge deficit, the

revenue had fall dramatically to VND 380,97 billion.

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Table 3: Profit of HBE from 2010 -2013(VND 1000)

2010 2011 2012 2013

Q1

12,15 -45,70 -51,70 -33,03

Q2

343,04 -33,94 -215,94 -248,63

Q3

630,44 504,00 732,74 347,52

Q4

-541,7 -111,42 -295,61 -14,09

Total

443,93 312,94 169,49 51,77

(Source: HBE’s Financial Statement 2010-2013)

Chart 2: Profit growth of HBE from 2010-2013

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Table 4: Asset of HBE from 2010-2013

Asset (VND1000) 2010 2011 2012 2013

Total Short-term liquid asset 17,603,935 15,022,056 13,411,030 3,010,985

Total asset 42,318,042 39,252,891 36,074,955 26,315,031

Short-term debt 12,083,904 12,020,350 8,837,408 2,857,856

Total Debt 18,254,180 14,687,577 12,112,408 2,857,856

Owners’ capital 24,063,862 24,565,314 23,962,548 23,457,175

(Source: Financial statement of HBE 2010-2013)

As you can see, HBE own small capital and do not increase much over the

year, in order to operate business, the company must mobilize capital from outside’

sources. The mainly sources is the commercial bank, development fund and credit

association.

Overall, the short-term liquid asset has tendency to fall from the year 2010 to

2013. In 2010, the short-term liquid asset is nearly VND 17, 6 billion and by 2013 it

decreases more than VND 14 billion, which is about VND 3 billion. It would mean

that company has spending more and more money on the short-term over 4 year.

And the total asset of company had happened to exactly the same trend. The total

asset of HBE had been fall out up to 38% within three years, from VND 42,3 billion

in 2010 to VND 26,3 billion. Why is there a VND 16 billion deficit in the total

amount of asset within three years? It could because the company had spent more

assets in paying the debt over the year. Just look at the table how the total debt had

been decreased.

25

Noticeable, the owners’ capital had remained nearly unchanged over this

period of time, which is around VND 24 billion. Thus, despite the company has

spending more money, the owners did not seem to earn much wealth though.

A good new that comes from the table is that the debt of company has

dramatically decreased in 4 year. From about VND 18, 2 billion in 2010 falling to

just about VND 2,8 billion in 2013, which is more than VND 15 billion.

We can say that the financial resources are a key measure to assess the

competitiveness of an enterprise. Especially in the field of retail distribution, the

economic efficiency of scale is quite clear, the potential of finance play a decisive

role in the business strategies of enterprises. To better understand why you need to

improve financial capability, let’s take a look.

Financial capability enables enterprises to reduce the purchase price.

Therefore, when a company has great financial potential, it's usually means that

have large distribution systems respectively. At purchase contract with the

manufacturer, they will sign the contract at the same time for all the primary basis

of their distribution, rather than buying each individual facility. This helps to

increase the order value, so that retail business is easy negotiating with partners to

increase production over sales discounts, or decrease in other costs that the retailer

must pay the manufacturer.

3.1.4 Significant achievements of HBE

Since its establishment, especially after converting into a joint stock

company, HBE has achieved steady growth, becoming the main provider of books,

and equipment in the province of Ha Tinh and some central provinces nearby.

Along with a high demand for books, school equipment, children's toys, wide field

of activities of the Company will be increasingly affirmed and occupies an

important position.

The company went on Securities Trading Center in Hanoi on 22/02/2008

which marked a very important point in the road of development. So far, by 2010,

the charter capital was VND 22.31058 billion.

At the moment, the company creates jobs for 56 staffs, which contribute a

wide amount of jobs to the labor market. (Source: HBE’s database)

26

3.2 Overview of Vietnam Retail Market

3.2.1 Vietnam’s Retail Industry and the Cases from Giant Retail Brands

Vietnam retail value sales slowed down in 2012 due to unstable state of

Vietnam’s economy, including the country's high inflation rate and interest rate.

Based on AT Kearney’s Global Retail Development Index (GRDI), Vietnam

retailing ranked in sixth place in 2009 but dropped to 14th in 2010 and 23rd place in

2011. By the end of 2012, it was not listed in the top 30 most attractive retail

countries in the world. Despite of this, Vietnam retail value sales still shows double

digit growth due to rapid urbanization, relatively large young population and

increasing middle income population.

Despite the fact that Vietnam's economy has had a significant downturn in

growth within the past two years the retail market continues to attract global and

regional players. In addition to Big C and Metro C&C who have been ever present

within Vietnam over the past number of years, there are several others who have

attempted to strengthen their presence or attempted to penetrate the modern trade

sector which accounts for just 20% of the whole market at this point in time.

Different operators from various segments: shopping malls, grocery retailers and

supermarkets, and convenient stores have been continuously working to attain new

market share. Existing operators such as Parkson, Lotte Mart, Family Mart, and

Circle K are competing with newcomers such as Aeon, E-Mart, NTUC Fairprice.

Vietnam was ranked as one of the top emerging markets for retail in 2008-

2009 but since then its rankings have continued to fall as the Vietnamese economy

has not performed as well and or with the same stability as others. There are several

reasons for that downturn in retail but it cannot be denied that the potential is great

and is still very much exists. An ever increasing demand of consumer goods and

rising disposable incomes will drive potential growth in a 90-million-population

economy. (Source: General Stastic Office, 2012). Also, rising urbanization and

expanding rural retail area promoted by improved infrastructure will be facilitating

such growth. Within the past few years, market players have been increasing their

presence in Vietnam. The number of modern stores, supermarkets, and shopping

malls has increased tremendously. So has the number of foreign brands been

27

penetrating into the market. Market volume is estimated at US$ 123.8 billion by end

of 2013. (Ha Thi Hong Nguyen, Steve Wood & Neil Wrigley.2013)

That’s the reason why, despite falling out of the Top 30 attractive retail

markets in the world two years ago, but with 90 million people, Vietnam has proved

attractive to foreign investors. In recent years, foreign investors are always the most

exciting areas in the retail sector. In Ho Chi Minh City, Parkson has invested $ 8

million to open shopping center in Vietnam its 9th called Parkson Cantavil. This is

considered a string of high -level commercial center with the largest number in the

country today.

The older retailers in Vietnam as Big C, Metro ... Big C state that “no restrict

on selling place as long as there is space." French giants are gradually expanding

into the rural market, after contemplating the big city is about to become saturated.

Not only the enterprise specialized in retail expand system, the famous

companies in the field of real estate and industrial also investment in supermarkets.

Son Ha Group supermarket chain founded Hiway. Vingroup also engaged in the

retail market by development plan of VingKC nationwide chain. Alphanam Group

will also participate in the market in 2014 with 79 Mart supermarket chain.

Ocean Retail - Group of Ocean (Ocean Group) joined the market in 2013,

after the hypermarket opened in Royal City and Times, has announced it will launch

added a commercial center and a super- market in two districts of Hanoi.

Meanwhile, a supermarket with the same brand also prepares to go into operation in

early 2014 in Ha Tinh.

Saigon Co-op, the largest supermarket chain in Vietnam, in 2013 announced

that along with NTUC FairPrice Singapore opened two supermarket chains which

are Xtra Co-op and Co-op XtraPlus. It is expected that the number of supermarkets

will continue to increase sharply in 2014. In particular, Saigon Co-op specifies the

strategic North when opening 2 more stores in Hoang Mai district with an

investment of over 110 billion. (Trang Lam, 2014)

During the period – one where Vietnam entered the WTO in 2007 – several

new investors entered the market, namely Metro, PCSC, Dairy Farm, Lotte,

Couche-Tard, SPAR and FamilyMart. Two groups 15 of multinational retailers

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undertook FDI in the Vietnamese retail market: first tier, rapidly globalising leading

retail TNCs such as Casino, Metro Group, Couche-Tard as well as second tier

regional retailers including Dairy Farm, Lotte, PCSC, Seiyu, and FamilyMart. The

rapid diffusion of retail TNCs was mainly through hyper/supermarket formats and,

more recently, convenience store formats.

Notably Metro Group has developed its Cash & Carry business since its

entry in 2002, growing store numbers to 13 by 2010 with total sales of US$552m

(IGD, 2011). It has also made a concerted effort to embed itself within the

Vietnamese market through its ‘Made in Vietnam’ programme that promotes

Vietnamese sourced products and involves co-operation with local authorities to

support agriculture (IGD, 2011; cf. Coe and Hess, 2005). Meanwhile, Casino’s Big

C portfolio has expanded through the acquisition of a controlling stake in the

Vindemia/ Groupe Bourbon joint venture in 2005 to control a portfolio of 11

hypermarkets by the end of 2010, which generate sales of US$236m (IGD, 2011).

In order to protect domestically owned supermarkets, the government of

Vietnam did not historically encourage 100% foreign-owned investment in the retail

industry. However, the regulations of foreign and domestic enterprises were

significantly modified after July 1st 2006, when the Foreign Investment Law and

Domestic Enterprise Law were replaced by the Unified Investment Law. Since then,

foreign investors can invest in any area not prohibited, instead of merely areas

allowed by state agencies. This principle has been applied to the domestic private

sector since 2000 and to foreign investment from 2006. Moreover, in accordance

with the country’s commitments to regional and international integration namely:

ASEAN Free Trade Area (AFTA), WTO, Vietnam-US Bilateral Trade Agreement

and the Japan-Vietnam Investment Agreement, the retail market gradually opened

to foreign investors. The permitted foreign capital share was raised to 50% in 2008,

while, from 2009, Vietnam allowed 100% foreign owned retailers to operate within

its borders (under the pre-2009 regulations, the foreign partner could only hold up

to 49% of capital).

Throughout the ‘transition’ and into the ‘globalization’ periods, Vietnamese

domestic retailers attempted to firm-up their competitive position prior to TNC

29

entry when de-regulation loosened the restrictions on expansion. These domestic

retailers not only focused on developing the supermarket format, but also cultivated

new formats such as:

The supermarket, trade center and Domestic retailers such as Maximart; Co-

op Mart developed this format that was subsequently developed by retail TNCs

through some Lotte stores in 2008, 2011 and a selection of Big C stores in 2009,

2010, 2011.

The convenience store format has been developed in the Vietnamese retail

market both by domestic small store operators and by multi-format retailers,

typically those that specialize in supermarket retailing. Domestic supermarket

specialists that have developed c-stores include Hapro, Citimart and Saigon Co-op.

Meanwhile convenience store specialists include both domestic and foreign

retailers. At times, these small stores have been located at petrol filling stations

(such as Day & Night convenience stores, owned by Phu An Thinh Company).

Frequently the development of the convenience store within Vietnam stemmed from

upgrading the small domestic independent operators and consolidating them into a

larger and centralized retail operation. For example, Hoang Corporation introduced

two approaches to convenience store development: Firstly, upgrading the existing

traditional family-owned store into standard 24Seven store with all-in support from

design, layout to sales training. Secondly, via a BOT (Build-Operate-Transfer)

contract; an all-in franchise whereby the owner could operate without the concerns

of store establishment and goods supply.

By far the largest convenience store operator was G7Mart, founded by the

owners of Trung Nguyen Coffee Company, which set about ‘upgrading’ existing

grocery stores. G7 trained the owners/sellers, in the process applying information

technology to coordinate the store systems and standardized the store signage

(Saigon Times, no date). The units were then re-branded either G7Mart or as a G7

member store. Clearly, G7 Mart capitalized on the existing customer bases of ‘mom

and pop’ stores but gained from better in-store standards, product ranges and

service levels. By August 2006, G7 had opened 500 G7marts, 9,500 G7 member

stores and 70 wholesale distribution centers. However, consumer acceptance of the

30

retail format and recognition of the retail brand was mixed – an issue exacerbated

by the separation of G7mart from its parent company, Coffee Trung Nguyen

Company. Consequently, many of the independent operators suspended their

contracts with G7 Company and returned to independent status in 2008. (Ha Thi

Hong Nguyen, Steve Wood & Neil Wrigley.2013)

3.2.2 The Situation of Book and Equipment Retail Market in Vietnam

Books, equipment and supplies Market for training is still very wide.

According to the International Monetary Fund (IMF), income per capita in Vietnam

improve each year; in 2013 was USD 1704 , increasing 12% compared with

2012.(Source : World Economic Outlook Database, April 2013).(For a countries

with young populations such as Vietnam, expected demand for educational products

and books the equipment for training is very large. These are factors that facilitate

potential develop in business and production activities of educational products and

high feasibility in the implementation of the business plan of the sector in the

coming years.

Like clothing shops, while some bookstores in Vietnam are scattered along

streets and even leave no trace down narrow alleys, other shops are close together

on some streets so-called book streets such as Dinh Le Street, Trang Tien Street,

Lang Street in Hanoi and Tran Huy Lieu Street in Ho Chi Minh City. Other shops

are located in shopping centers and in areas surrounding schools, universities and

research institutes.

Interestingly, pavements are the ideal places for unsettled bookshops to

display their books spaciously and sell them with highest discount rates, ranging

from 30% to 50% off the publisher’s recommended retail price.

In bookstores, you do not have to waste your time bargaining as books are

sold at their retail prices and sometimes discounts are available for those who buy in

large quantity or for frequent customers only.

Academic year 2013 - 2014, in order to meet market demand, the

manufacturers and the issuance of school equipment and books , school supplies has

launched several new products which is rich and diverse in form codes and

categories but prices remain relatively stable . Instead of choosing a small retail

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stores sold the product of books, notebooks, school supplies for their children as the

year before, the first destination of many parents this year is the supermarkets,

bookstores, bookstore systems. In addition to ensuring product quality, clear origin,

supermarkets, bookstores were associated with the manufacturers to offer discounts.

This year the number of items in learning services of Vietnamese brands in

supermarkets, bookstores accounted for about 70-85 %. The previous year,

consumers often preferred the products with nice designs, low price. This criteria is

easily found in the products of Chinese origin as pens, pencils, wax, animal shaped

erasers, rulers ... Although no studies have pointed out the real school supplies

products by Chinese manufacturer harmful to the user but more recent information

Chinese products containing toxic additives, does not guarantee safety for many

users appear to most people consumers tend to choose domestic products.

The brand has been gained the market 's trust in paper notebooks is Hong Ha

, Hai Tien , Tien Thanh , Vinh Tien ; Thien Long Pen , Ben Nghe and the type of

book bags , backpacks produced by Vietnam . Notebook type 72 pages - 96 pages

from VND 3500-7500 at the same price / book ; type 120 pages VND 6000-15000

copper price / book ; type 200 pages VND 12000-16000 copper price / quality

notebooks and paper manufacturers. In addition to the advantages bright white

paper, white paper various types of inorganic natural anti -glare, eye strain, the price

difference is about VND 500/ book. Pens can vary in price VND15000-70000 /

medal ; ballpoint pen types priced from VND 2000-7000/unit ; pencil, crayon from

VND 3000-10000 unit; Text boxes cost VND 5000-35000/medal depending on type

(plastic, cloth or tin). The type of backpack, briefcase Vietnamese brands like Ming

Tien, Ladoda, Hami ... were put on the market with a sleek, durable and popular.

The advantage of this product is light; the strap can be moved back and look under

the age of each user, angled scratch ... with prices ranging from 200-550 thousand

VND / unit. Although the price of this product increased 10-15 % compared to last

year but still a lot of people choose to buy. This year, many kinds of school supplies

for students appearing fancy designs as backpacks, notebooks, rulers, pencil case...

are printed animals, cartoon characters with funny colorful collection were thronged

with customers chatter. Other products such as table lamps, lamp against myopia,

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student desks, pocket PC ... Vietnamese brands are also sold with many designs,

colors and quality not inferior to imported goods.

In the case in this report Ha Tinh province has a lot of schools: 340

elementary schools, 200 junior high schools, 45 secondary schools and the

University of Ha Tinh.(Source : HBE’s website http://hbec.com.vn/hbec/).

Therefore, the demand for school equipment and toys are great. Moreover,

the company is the main producer, supplier and distributor of school equipment and

children's toys in the province and neighboring provinces. Currently, the Company's

products produced are consumed virtually entire products. In the future, the

increasing demand of the market is a promising development for the Company.

3.3 The Situation Analysis of Retail Activities in HBE

3.3.1 Infrastructure

One of the most important factors of retail industry is the retail place. The

suitable place is the very first criteria which bring the strength to retail brand. Other

factors such as product, price comes after.

Every retail enterprise or trade has its own criteria. For example, a donut

shop needs in a convenient way on the way to work. On the other hand, wine shop

is located on the side of the road under the way home from work place.

The choice of location has a huge impact to chances of success.

In this report’s case, HBE’s stores locate on the main street, in the center part

of the city which covers a geographical area of market to share the cost savings and

product distribution. Company has two store account for more than 1000 square

meter placed at 58 Phan Dinh Phung street, the main street in Ha Tinh City.

On the first floor, there is many education services stuff and Vietnamese-

English dictionaries, great section in Vietnamese on history, culture, and political.

On upstairs is the best selection of French and English children's books - lots of

education services materials, school facilities such as chairs, table... Etc. On the top

floor they have office supplies, gift section, toys, and various other random things.

Due to its daily activity, this place draws many people and employees into

the area during business hours. The place is also the hub for public transportation,

and there is a high level of pedestrian traffic. In addition, it has a large number of

33

residents living in the area, passersby are crowd which is convenient for the retail

place, but also where there are high land rents. Moreover, limited parking and

longer driving times can discourage suburban shoppers from patronizing stores in

this place. Shopping flow in the evening and on weekends is a little also slow in this

place. Shoplifting is also a concern, requiring increased security costs and/or

inventory losses.

To select the appropriate location, HBE used different methods for assessing

the statistical location as vehicle traffic through the investigation of the shopping

habits of consumers, the local analysis competition points.

HBE usually evaluate sales performance of a particular store by the criteria:

the number of people who go through the store in a day average, the proportion of

people in the store passing of the stores, proportion of persons in the total number of

people shopping in the store, the average amount spent for the purchase of a

customer.

One can shop for weakness lies in the unfavorable position, or at least bear

had passersby into the store or more people into the store just to surf rather than

buy, or not buying many goods. All these problems could be overcome.

In HBE, Traffic density problems are solved by choosing more appropriate

location; number of people in the store raised by more attractive advertising and

display rows in a beautiful glass counters to attract attention and customer interest,

and some shoppers and purchases primarily a matter of quality, product pricing and

sales of art.

3.3.2 Human resources

There are eight people take part in the managing process of HBE. Most of

them do not have qualification that suit the business of company. And in this kind

of dynamic business sector, some of them are really old for the job, could not stand

the change. (See more at appendices).

And along with these leaders are nearly 56 workers, most of them are related

with these leaders, together contribute and develop company. (Source: HBE’s

database)

34

According to Mr. Bao Ho Gia (General Director of HBE) and Mr. Toai

Nguyen Thai (Manager of Organized and Administrative Department) at the

moment, in HBE, the situation of human resource in staff could be summarized as

below:

- Lack of professional in working, being late and lazy at work

- Lack of confidence in communication led to the lack of present ability,

influence and persuasion;

- Lack of creativity, passive thinking leading to difficulties when cope with

situations need to take proactive measures;

- Lack of ability to control emotions, especially when they are put into

solving situations with difficult customers or the conflict of interests;

- English proficiency is not met the basic requirements to serve foreign

customers at the counter;

On the other hand, the leaders are not very well training at management skill

as well as specialized. (See more at appendices). Not much man being unable to

take high pressure from work because of the age. They are a little too old for the

job. To be honest, it is very hard to find out a man who is well trained in term of

retail management major, mostly doing business based on experience and intuition,

do not own any long-term strategy. In addition, the high position is rarely delegate

any important mission to their staff, they like to do it on their own because in their

mind, no one can do it better than them, consequently, the staff are not received

many chances to develop. And moreover, company does not pay much attention at

human resource training activities.

They are only good at adaptation under the dynamic change of the market,

able to meet the trend of customer demand.

Developing retail market requires certain conditions: extensive networks,

fixed costs (retail location, infrastructure investment) large, professional workforce

suitable for retail properties. In three major conditions mentioned above, the first

two conditions can quickly establish if there are sufficient material resources.

However, the third condition is not easily created by them related to human factors -

the most important factor in the process of reform and development. Best human

35

resource not only master all these networks, the technology but also is the decisive

factor improvement network, technology, processes ... and what is more important

is to create and maintain sustainable relationships with customers

3.3.3 Logistic System

HBE do self- made logistics services which means that company take care

from A to Z, from the stage of warehousing, freight to distribution centers or retail

stores. Company own two large trucks to do the goods transportation on the end of

each month, and they store the inventory in the warehouse where is wide about 50

square meters in backward of the two stores. There are two drivers, whenever

needed they bring new product from the manufacture replacing the old inventory as

well as supply the deficit amount of goods. The manufacture placed at Hoang Ha,

Tan Trung Village, Thach Trung, Ha Tinh City, Ha Tinh Province, about 15

kilometer far from the store, which take about 20 minutes for driving.

Companies do self-made logistics services is a huge obstacle to competition,

resource waste and inefficiency. Because companies have spent large sums of

money, usually borrowed to invest in systems infrastructure, technical facilities like

cargo warehousing, loading and unloading equipment, transportation, human

resources management ... at that time, in addition to financial pressures, apparatus

bulge, company also most at risk, if the waste of storage capacity, means not being

fully exploited, or are stuck in a row in several stages. Thus, self- service logistics

enterprises only fit the huge hypermarket chains internationally.

Logistics system of HBE as warehouse storage, specialized vans

asynchronous, not qualified under state regulations. In addition, system protection

and management of goods are not absolutely safe

Efficient supply chain management provides two benefits to retailers and

their customers: (1) fewer stock outs and (2) tailored assortments. These benefits

translate into greater sales, lower costs, higher inventory turnover, and lower

markdowns for retailers.

Logistics, as Peter F. Drucker, the father of modern school management

industry, has predicted “Logistics is the driving force for innovation and new

opportunities that we have not touched. It was “hidden shelf “of the economy.”

36

Logistics today solve three simultaneous flow of important and crucial that

the world economy is the flow of material, financial flows (capital) and information

flow. If there is an effective solution and the most effective for three flow control on

the business as well as in each country, this is logistics flow that the ultimate goal is

to help people save resources , and resources enjoyment right time, right place ,

right cost , quality and price.

The challenge remains the largest global logistics is a blockage of these three

flows. Where we have found that the material is still distribution gap, where full

inventory, where the lack of resources, high logistics costs and poverty, and meet

customer satisfaction remains a gap!

Besides, the coordination of the delivery vehicle type, right place, and

right time still operates quite simple. This does not only affect the business but also

increase labor costs as well as management.

3.4. Evaluate the situation of retail activities of HBE

3.4.1 Strengths

The company has always focused on exploration and creative ways to

develop; taking advantage available is Vietnam's retail market development

potential. Company knows to invest in important factors such as human and trade

promotion. The advertising activities, promotion ...Vietnamese style initially be

used effectively.

Having the ability to update information quickly, understand consumer

tastes, easily adapt to business environment and react promptly against market

fluctuations. The retailer is in direct contact with the consumer, have the

opportunity to closely understand the needs and cultural traits, traditions and

mentality of each customer segment.

3.4.2 Weakness

Financial capacity of HBE still weak. Scale low amount of capital, the

ability to access loans from banks Trade and other financial institutions also very

difficult. This makes enterprise scalability limited scale of operations, the first

investment projects, advertising campaigns, market research ...

37

Logistics system is very weak, did not meet the requirements. From system

trucks, warehouses, storage methods to protect systems and cargo management are

outdated, not competitive enough. This can easily lead to shortages as demand rises

and not preserved when excess merchandise.

Work style is still unprofessional, qualifications of leaders is limited, lack

business management skills, lack of knowledge and practical experience.

Scientific technical and technology is low. Use of equipment, old

technology, and means of payment is outdated, making it difficult for shoppers. The

ability to apply information technology in business processes is still very limited.

38

Chapter 4 Recommendations for developing retail activities in HBE

4.1 Corporate with other local retailers in order to improve financial capability

and logistic systems

In the business situation of Vietnam at present, namely the majority of small,

sporadic and disjointed business, only a handful of now regarded as " big" as the

domestic retail Saigon Co-op, Phu Thai, Satra ,Hapro ... but only has low financial

compared with the set Foreign retail groups like corporations in Vietnam Metro

Cash & Carry, Big C ,Parkson .... , the association is an inevitable trend if local

retailers to survive and development in their home market. Because there is

currently no common definition of what about legal issues links between

businesses, the division of the form of association are also many different ways, so

in this section I will only raise a number of effective ways of association which is

capable of high practical applications in the current circumstances of HBE.

There are many forms and levels of various cooperate, from one section to

full associate. To achieve economic efficiency from the association, the joint

companies should at least link the point of purchase, which means companies

general will agree to buy goods together. Doing this will increase the number of

units traded goods in one order, and thus easier proposed increase in the discount or

rebate related costs from the producers, through which the retailer in the

collaboration can reduce purchase costs, create competitive advantage when

compared with others .

This form is quite easily done as it does not require too much from retailers.

However, in order to achieve greater discount or related costs requires linkages

must also be large enough to some extent that is enough to cause the producer

accept the offer.

The next form of cooperation is in which retailers can make the link in

transport logistics, storage and distribution of goods from the warehouse to the

retail store. If retailers only link in the point of purchase, the purchase of goods

39

arriving gathered, owners will automatically transfer their goods through the

warehouse the various transport services. But in this form of association, cargo will

be transferred to the general gathering of unified storage, and transportation services

from where the goods to the warehouse, from warehouse to distribution facilities

will be agreed to use the same logistics system. All activities will take place such as

a large retail enterprise storage and transport rather than separated out various as

other small retailers. As well as common purchases, links in logistical help to the

members minimizing cost quite a lot compared to when there is no link.

There's also a few other forms of association like affiliate support stitched

together in sales, affiliate promotion activities , links in the search for market

information ... all for the purpose of minimizing costs for members and creating

linkages are the positive effects greater retail distribution operations .

4.2 Enhancing Customer Service

Attracting new customers is difficult, retention of old customers, making

them became patrons even more difficult. Meanwhile, patrons bring 60-70% of

revenue for the retail store. Therefore, HBE need to pay attention to these measures

build trust and retain its customers.

The customer back regularly shop at a store or a supermarket is for any

reason? That is because they feel satisfied when buying and shopping there. So the

art to retain customers is to give them comfort when they are shopping.

In situation of retail in Vietnam today, the price competition with foreign

retailers are notoriously difficult for internal retailers. Therefore, instead of trying to

entice customers by offering lower price, the retailers should follow trends make an

impression by serving customers more professionally.

In order to improve the quality service, the first thing that the retailers need

to do is to improve the capacity of the serving staff. A retail store have good

customer service is the place where customers feel respected, feel comfortable

while shopping. The sales staff, billing staff, the direct contact with customers

should have a friendly attitude, welcome customers. Moreover, a salesman not only

know divestiture unloading cargo or sale to consumers , but also need to understand

40

the goods to be able to help, advise customers when interrogated . Moreover, the

staff needs to be proactive asked to advise clients.

Service attitude towards customers is also manifested in term of

management of treat customers like, especially when the service receives the

complaint from consumers. In the modern retail stores today, being complained,

complaints from shoppers are not infrequent. Of course, the cause of the

malfunction is not always from the retailers; even when it was due to reckless or

understand know of the consumer. However, a good manager, a thing act wisely

will always seek to resolve issues quickly and to satisfy the customer. Based on the

experience of the manager’s reputation, once there incident occurred complaints,

should quickly analyze the causes and offer solutions appropriate. In case of error

from the consumer or from any third party, should be explained clearly with

customers and quickly take measures to compensate satisfactorily. Shouldn’t for

that little bit of profit to offend customers, so as not to prolong the matter resolved

because that will make thing worse.

One thing that managers should keep in mind, a when customers are

dissatisfied with a retail store, they will not return it again, and they will continue to

complain to those around when given the chance.

In addition, retail quality service is also built through the development

modern payment system, fast; or the supply of quality products good quality; the

convenience store layout and eye-catching.

4.3 Creating an appealing store atmosphere

The environment in a store, the design of the store & the presentation and

location of merchandise in the store has a significant impact on shopping behavior.

The design of a store or Web site can attract customers to visit the location, increase

the time they spend in the store or at the site, and increase the amount of

merchandise they purchase. Store design can also have long-term effects on

building customer loyalty toward the retailer by enhancing the retailer’s brand

image and providing rewarding shopping experiences that encourage repeat visits.

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There are six factors that can creating an appealing atmosphere, which I

think it can be apply easily in order to improve retail activities in HBE. That is

lighting, highlighting merchandise, color, music, scent and energy efficient-lighting.

4.3.1 Lighting

Good lighting in a store involves more than simply illuminating space.

Lighting can highlight merchandise, sculpt space, and capture a mood or feeling

that enhances the store’s image. Retailers are exploring ways to save energy with

technologically advanced lighting. Having the appropriate lighting has been shown

to positively influence customer shopping behavior.

4.3.2 Highlighting Merchandise

A good lighting system helps create a sense of excitement in the store. At the

same time, lighting must provide an accurate color rendition of the merchandise.

For instance, Walmart has been putting skylights into the roofs of its stores. This

addition cuts energy costs and creates more natural light, which is excellent for

hardware and home goods. However, it is best to use artificial light for apparel so

that customers can clearly see details.

Another key use of lighting is called popping the merchandise —focusing

spotlights on special feature areas and items. Using lighting to focus on strategic

pockets of merchandise trains shoppers’ eyes on the merchandise and draws

customers Pike Place Fish Markets’ employees play a major role in creating an

entertaining and rewarding shopping experience. Strategically through the store,

Nike, for example, uses a lot of contrast and shadows, highlighting the merchandise

but not necessarily the architecture. Mood Creation Traditionally, U.S. specialty and

department stores have employed incandescent lighting sources to promote a warm

and cozy ambience.

Overall lighting sources were reduced, and accent lighting was pronounced

to call attention to merchandise and displays. It was meant to feel like someone’s

home—dim lighting overall, with artwork and other areas of interest highlighted.

Many stores and boutiques in department stores use low levels of light to coordinate

with their overall ambience of resembling a townhouse. Department and mass-

market retailers, in contrast, tend to be more brightly lit overall.

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4.3.3 Energy-Efficient Lighting

As the price of energy soars and retailers and their customers become more

energy-conscious, retailers are looking for ways to cut their energy costs and be

more ecologically friendly. One obvious source of energy consumption is the

lighting in a store. Stores are switching from incandescent lighting to more energy-

efficient fluorescent lights.

4.3.4 Color

The creative use of color can enhance a retailer’s image and help create a

mood. Warm colors (red, gold, and yellow) produce emotional, vibrant, hot, and

active responses, whereas cool colors (white, blue, and green) have a peaceful,

gentle, calming effect.

4.3.5 Music

Like color and lighting, music can either add to or detract from a retailer’s

total atmospheric package. Unlike other atmospheric elements, however, music can

be easily changed. For example, one retailer has a system that allows certain music

to be played at certain times of the day. It can play jazzy music in the morning and

adult contemporary in the afternoon. These selections mirror the findings that most

of its morning shoppers are older, whereas afternoon shoppers tend to be in the 35-

to-40-year age range. Retailers also can use music to affect customers’ behavior.

Music can control the pace of store traffic, create an image, and attract or direct

consumers’ attention. Managers realized that although children are the consumers

of their products, adults are the customers. In general, though, slow is good. A mix

of classical or otherwise soothing music encourages shoppers to slow down, relax,

and take a good look at the merchandise.

4.3.6 Scent

Smell has a large impact on customer’s mood and emotions. Scent, in

conjunction with music, has a positive impact on the customer’s level of excitement

and satisfaction with the shopping experience. Scents that are neutral produce more

positive feelings toward the store than no scent. Customers in scented stores think

they spent less time in the store than do those in unscented stores.

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Chapter 5 Conclusion

In this graduation report, I choose the topic: “Developing the retail activities

at HBE”. Opening up with the only objective is to find out the solution to improve

the retail activities in HBE, i mainly focus on three retail theories: central place

theory, supply chain theory and merchandise placement theories as fundamental

theories to apply into analyzing HBE’s retail activities. After that, by giving an

over view of HBE in term of establishment and development, organizational

structure& finance situation, as well as Vietnam retail market, along with the

situation analysis of retail activities in HBE concluding three main factors:

infrastructure, human resources& logistic system; and then i come up with an

evaluation of situation of retail activities in term of strengths and weakness. Based

on what I have found, I shall then give three recommendations to develop retail

activities of HBE; firstly, corporate with other local retailers in order to improve

financial capability and logistic systems; secondly, enhancing customer services;

thirdly, creating an appealing store atmosphere. Moreover, I have gained for

myself a lot of useful knowledge in the retail sector during the research process.

The market change every day, the policy changes every day as well as

customer demand, interest rate…You cannot affect these factors. But, as a retailer,

you can to develop a vaccine in order to overcome difficulty in front of you.

In case of HBE, the most important thing now is to identify the right

business direction long-term as to enhance the financial resources and infrastructure

through solutions such as corporation. The corporation is essential to do because it

not requires multiple procedures that are consistent with the retailers which has

small scale as HBE. Next, HBE need to focus on the work of opening markets

towards rural areas , work to promote the brand and customer retention familiar ...

The proactively training human resource to meet the requirement of modern and

professional are extremely important when in become scarce in term of human at

both levels of management as well as salesman.

44

References

1. Applebaum, W., & Kaylin, S. O. (1974). Case Studies in Shopping

Centre Development and Operation.New York: International Council of

Shopping Centers

2. Christaller, W. (1933). Central Places in Southern Germany. London:

Prentice-Hall [1966].

3. Coe, N. and Hess, M. (2005), "The internationalization of retailing:

implications for supply network restructuring in East Asia and Eastern

Europe", Journal of Economic Geography, Vol. 5 No. 4, pp. 449-473.

4. Dawson, J. A. (1980). Retail Geography. London: Routledge.

5. Emmett Cox. (2012), Retail Analytics, The Secret Weapon, John Wiley &

Sons, Inc., pp 76-78.

6. Financial Statement of HBE from 2010-2013

7. Ha Thi Hong Nguyen, Steve Wood & Neil Wrigley.(2013), The

Emerging Food Retail Structure of Vietnam: Phases of Expansion in a

Post-Socialist Environment, p.14-18

8. Huff, D. L. (1964). Defining and Estimating a Trade Area. Journal of

Marketing, 28(3), 8-38.

9. HBE’s website and database. Accessed at http://hbec.com.vn/hbec/

10. Johan P.Larsson & Özge Öner.( 2014), LOCATION AND CO-

LOCATION IN RETAIL: A probabilistic approach using geo-coded data

for Swedish metropolitan retail markets, pp.5

11. Lösch, A. (1940). The Economics of Location.Jena: Fischer, 1940.

English translation. New Haven: Yale University Press.

12. Michael Levy & Barton A.Weitz.(2011), Retail management, 8th edition,

Irwin/McGraw Hill

13. Sparks, L., & Dawson, J. A. (1989). Land Use Policy: Institute for Retail

Studies.

14. Thejeswini. G. (2010), “Retail Formats”, Ezine Article.

45

15. Trang Lam.(2014), “Bán lẻ : Ngành hot ở VN 2014” , Trí Thức Trẻ.

Accessed at http://www.gocnhinalan.com/bai-cua-khach/bn-ngnh-hot-vn-

2014.html

46

Appendices

HBE’s human resources qualifications

1. Ho Gia Bao – General Director of HBE and also the Chairman of Board of

Management of HBE

Qualifications:

- Bachelor of Business Development - National Economics University

- Bachelor of Mathematics - University of Pedagogy

2. Ho Phuong Nam – Deputy General Director of HBE,the member of Board

of Management

Qualifications:

- Bachelor of University of Pedagody

3. Nguyen Thai Toai – member of Board of Management, Manager of

Organized and Administrative Department.

Qualifications:

- Intermediate School

4. Ho Thi Nga – Deputy General Dicrector of HBE

Qualifications:

- Intermediate – Da Nang TW2 Food Intermediate School

5. Nguyen Thi Thu Hang – Deputy General Director of HBE, Chief

Accountant

Qualifications:

- Bachelor of Economics - University of Finance and Accounting

6. Nguyen Thi Yen – Manager of Board of Supervisory

Qualifications:

- Intermediate of Finance and Accounting

7. Nguyen Thi Lan – member of Board of Supervisory

Qualifications :

- Bachelor of Economics - University of Finance and Accounting

47

8. Truong Thi Ninh – member of Board of Supervisory

Qualifications:

- Intermidate school