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Inertia blamed for Parkson’s failure in Vietnam

Many people believe that Parkson will continue contracting after four retail stores have already closed due to massive operating losses.

Parkson has closed four stores in Vietnam
Parkson has closed four stores in Vietnam

The Parkson retail chain in Vietnam, under the Parkson Holding Berhad of Malaysian conglomerate Lion Group has suffered huge losses after eight years. It has just closed Parkson Keangnam, Parkson Paragon and Parkson Viet Tower. Most recently Parkson Flemington in HCM City was shut and many think that Parkson Cantavil will be the next branch to close.

Parkson Cantavil was opened in December 2013 and is the ninth Parkson store in Vietnam. But it has failed to attract visitors and partners keep changing. The building is nearly deserted and many parts are constantly shut for maintainance.

According to the financial report for the first quarter of 2018, the business results were bleak as Parkson incurred VND24bn (USD1m) in pre-tax losses. This was also the seventh quarterly consecutive loss in Vietnam. Revenue in the first three months reached VND111bn, a decrease of 11% compared to the same period last year while operating costs failed to fall.

According to Tan Sri William H.J. Cheng, chairman of Parkson Holdings, the Vietnamese retail market is reaching saturation.

Several experts have predicted that Parkson will withdraw from Vietnam. Pham Trong Chinh from Business Studies and Assistance Centre said Parkson’s fall had been predicted three years ago when it shut the first store.

When Parkson entered Vietnam, they only had to compete with Diamond Plaza which was much smaller. But 10 years later, many shopping malls have been built and Parkson lost in the fierce competition.

“New shopping malls have overtaken Parkson in three criteria in terms of retail space, eating areas and entertainment,” Chinh said.

The interior designs of new shopping centres are more modern, they have more brands and offer more entertainment for families. They also opened large areas for food. According to Chinh, while competitors are changing to attract visitors, Parkson seems to have suffered from inertia when it comes to upgrading its premises.

Parkson only aims at luxury products so it lost other targeted visitors. However, Chinh also said that it was not easy to change a shopping centre since it required massive investment.