Vietnam sees chain drugstores boom during COVID pandemic

As the coronavirus pandemic has spread through Vietnam, so has the number of drugstores operated by major chains.

Traditionally the domain of mom-and-pop shops, the number of drugstores run by the three major chains has increased eightfold since 2019 as Vietnamese residents become more health conscious in the wake of the pandemic.

On a recent trip to a Long Chau drugstore location in the capital, Hanoi, a woman was pleasantly surprised when she glimpsed at the price of cough medicine.

"This is half off the usual price," said the 35-year-old office worker. "Can I really get it for this cheap?"

She said she usually purchases cough medicine at independently run shops. But at Long Chau, many products are sold at a discount, and the chain also offers purchase points, which has encouraged her to visit this particular store in the future, she added.

Mom-and-pop stores were once the go-to for medicine in Vietnam, known for their attentive customer service. However, they were also known for an opaque pricing system that often forced buyers to purchase medicine at a verbal quote.

Adding to the frustration, some shops would switch labels on products. These factors led to low customer satisfaction with mom-and-pop stores.

Chains were able to step in and offer consistent pricing, as well as lower prices as they sought to compete with rivals. The chains also actively engage in online sales.

"I can purchase with peace of mind at a drugstore without having to worry about prices or the contents of the package," said the office worker.

There are now about 2,400 outlets between Vietnam's three biggest drugstore chains. Pharmacity, the biggest, has roughly 1,100 locations.

By 2025, half the Vietnamese population will be able to reach a Pharmacity store within 10 minutes by motorcycle, said CEO Chris Blank. The company plans to expand the network to 5,000 stores by that date.

Long Chau, an affiliate under Vietnamese tech group FPT, has roughly 700 locations. An Khang, acquired by electronics retailer Mobile World Group, fields approximately 500 stores.

Foreign operators, such as Hong Kong chain Watsons and Japanese chain Matsumotokiyoshi have set up shop in Ho Chi Minh City. 

Rising income levels and changing consumer habits are creating growth tailwinds for drugstore chains in Vietnam. For one, customers are shifting to buying fresh foods at indoor grocery stores rather than at traditional open-air markets.

Right now, drugstores in Vietnam generally sell pharmaceuticals and health foods. Drugstores could start resembling convenience stores by offering other foods, cosmetics and daily necessities.
 

Nguồn Nikkei Asia