Korean GS25 heating up Vietnam’s franchising scene

In 2017, South Korea-owned convenience franchise chain GS25, under the management of GS Retail, officially entered Vietnam by setting up a joint venture with local SonKim Land.

Yun Ju Young, managing director of GS25 Vietnam, unveiled that the convenience chain planned to launch the first four stores in Ho Chi Minh City through franchising, followed by a total of 50 stores in major cities, such as Hanoi, Haiphong, Danang, and Can Tho by the end of 2018.

Yun also stated that the capital city of Hanoi would be the latter part of its expansion strategy in Vietnam. The Korean retailer expects to open 2,500 convenience stores across the country over the next decade.

International franchises seek foothold in Vietnam

Previously, GS25’s convenience rival, Japanese-owned 7-Eleven, an American international chain of convenience stores, entered Vietnam in 2015 through a franchising deal with a joint venture named Seven System Vietnam.

Nonetheless, the Texas-headquartered brand did not launch any convenience stores in Vietnam until 2017, with the first store located in the business hub of Ho Chi Minh City. In contrast with GS25, 7-Eleven only expected to set up about 1,000 convenience stores across Vietnam in the next ten years.

GS25 was one of the 31 foreign companies penetrating the Vietnamese marketplace through franchising in 2017 alone. These multinationals mainly came from the UK, the US, Taiwan, Hong Kong, and Japan from sectors such as food and beverages (F&B), education, and consumer goods.

Prominent brands among the multitude of franchisers currently present in Vietnam include the Costa coffee chain of UK-owned Costa International Limited and Dutch apparel retail ITX MERKEN B.V with its cluster of clothing, footwear, and accessories brands including Pull & Bear, Stradivarius, and Massimo Dutti.

Previously, American Circle K, launched its first convenience store in Ho Chi Minh City on December 25, 2008 through franchising, followed by the next 69 non-stop stores in the same city. In 2017, the US-owned retailer opened its 100th convenience outlet, also located in Ho Chi Minh City, after a decade in Vietnam.

In addition, Singapore-invested franchising Shop n Go, set foot in Ho Chi Minh City in 2005 as the first foreign convenience brand to enter the country’s 24/7 retail market. To date, the Singaporean brand distributes products ranging from processed food and F&B items to makeup and skincare products.