How Convenience Stores and Minimarts Shape Retail Markets

• 12 October 2018
• Local News
• 4376 Views

The retail sector in Cambodia has been buoyed by ongoing economic growth, but retailers in Cambodia have been slower to modernize and the country remains as one of the most unsaturated convenience-store markets in Asia.

Per-capita income is growing around 7% per year though in Cambodia, and approaching the US$1,500 level. Benefiting from that growth and rapid urbanization, I believe the number of convenience stores in the country will soon to rise.

At the same time, growth has been recorded in the convenience stores and supermarket categories. It is the trend that modern retail sales accounts for bigger proportion of total sales, from traditional venues such as small-scale grocery stores and wet markets. Major players such as Lucky Supermarket, Super Duper etc., and the boom of mini-market and convenience store that offers well-lit, air-conditioned stores with consistent high-quality offerings. They are also expanding into secondary markets to increase their presence.

Although modern retails are opening at the accelerated rate, the landscape of retail market in Cambodia is still dominated by small and medium-sized enterprises. Outside Phnom Penh, majority of the retail purchases in the country are still made in small and medium-sized, often family-owned enterprises. At present, the traditional retail channels still account for majority of retail sales of the market, but this number is forecasted to decline in the next 10 to 15 years.

In a retail development prospective, investors are also favoring convenience stores since their return on investment is much higher than traditional supermarkets or hypermarkets, as the initial investment is much lower. At the same time, it also sells products with clear origins and offering good customer services.

Customers these days are willing to pay a 10-20% premium over prices at these smaller convenience shops for clean stores with higher-quality goods. Minimarts are typically larger, in the 150 to 200 square meters range. These days, many of the mini marts operated by AEON Maxvalu Express also boasts a product lineup on par with the supermarket, with fresh and processed foods available.

In the long term, low-cost and low-price strategy that offered a wide variety of items will be able to attract more regular customers. In terms of operation, modern small-sized supermarket like AEON Maxvalu Express also enjoys the advantages in terms of capital, business strategy and an established global distribution chain.

On the other hand, convenience store operators need to upgrade in order to remain competitive in the market. Other countries such as Thailand, their convenience store also provides services include commissions from selling mobile-phone cards, providing bill-payment services and also acting as a collection point for other consignments.

In the future, we believe that high efficiently run convenience stores in prime locations, or those operated by premier retail developers will lead the way in the market. Going out to shop can be a frustrating experience for some, any convenience stores can expect steady business if they are near consumers’ homes.

• Analysis