The encyclopedia · Sales & Retail · Strategic decision · 2015–2019
Auchan built 21 Vietnam supermarkets, then sold the loss-making chain after four years
Auchan entered Vietnam in 2015 and grew to 21 stores. By 2019, the 18 left made €45M in revenue but still lost money.
Auchan Retail · Auchan Vietnam · 2019-05-20
What it means today
When a retailer enters a market with a familiar supermarket format, Auchan Vietnam is the warning that revenue and store count do not prove local unit economics.
What happened
Auchan entered Vietnam in 2015 and built a supermarket chain with 21 stores. By May 2019 it had already closed three outlets and was looking for a buyer for the 18 that remained: 13 in Ho Chi Minh City, four in Hanoi, and one in Tay Ninh.
The 18 outlets generated €45 million (US$50.4 million) in 2018, but they were still loss-making. Auchan said it had reviewed difficult markets including Italy and Vietnam; one internal source told Vietnam Investment Review that after four years the company still had not found an economic model that matched the Vietnamese market.
In June 2019, Saigon Co.op bought Auchan Vietnam's operations. The handover covered the stores, the e-commerce platform and the online application; 15 stores had recently closed and only three profitable Ho Chi Minh City outlets remained open. The price was not disclosed.
Why it happened
- Auchan scaled a supermarket chain before proving a Vietnam model that could make money against local and regional competitors.
- Revenue did not equal fit: the remaining stores produced €45M in 2018 but still failed to cover the operating model.
- The chain entered as a Western distributor just as domestic retailers were strengthening, leaving too little room for a slow imported format.
The lesson
Retail expansion has to prove unit economics before footprint. A chain with revenue but no local model is just a larger exit package.
Aftermath
Saigon Co.op took over Auchan Vietnam's operations in 2019, including the e-commerce platform and online application. It said the stores would be renamed under Co.opmart, Co.opXtra and Finelife formats, while Auchan employees would move to Saigon Co.op.
Sources
- French retailer Auchan pulls out of Vietnam — Vietnam Investment Review, May 2019
- Auchan retail chain to leave Việt Nam — Vietnam News, May 2019
- Saigon Co.op buys out French retailer Auchan — Vietnam News, June 2019
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