A Xedap.vn chain store in Ho Chi Minh City. The chain aims to raise its number of stores to over 100 in the next few years. ( Photo: xedap.vn)
Peter Nguyen, general manager of Vong Xanh JSC, revealed that the market isgrowing by 15% annually with about 2.5 million bicycles sold every year, equivalentto aggregate revenue of 7.5 trillion VND (320 million USD).
Children's bicycles dominate sales in the market over the past few years asVietnamese parents are willing to buy up to three bicycles for their childrenwhen they are between one and 15 years old.
The general manager underlined three factors that would continue to fuel themarket growth in the long term.
The first factor involves the rising middle class in the country, which woulddrive a new trend toward cycling for health, increasing the demand for sportsbicycles.
Another factor is the addition of bike lanes to urban streets, which wouldencourage bicycle commuting and increase the number of cyclists in big cities.As more people stop using their cars and shift to greener means of transport,bicycle sales would rise.
The last factor centres around the expansion of public transport systems, atrend that drives motorbikes out of big cities. With the decline of motorbikes,commuters have no choice but to rely on bicycles for short-distance travel,which is good news for bicycle sellers.
The bicycle market is lucrative but fragmented. Big companies hold just 10% ofthe market share whereas 90% falls to a large number of small-sized retailers.
Mobile World JSC participated in the market in 2022 with the launch of theAVACycle chain that comprises 158 bicycle stores.
Mobile World CEO Doan Van Hieu Em revealed that each store grossed over 50bicycles in daily sales just a few days after its launch.
As such, AVACycle is expected to make around 400 billion VND (17 million USD)in revenue in its first year of operation and continue to grow steadily year byyear.
Another retail giant in the market is Vong Xanh JSC, which moved in 2016 andowns the Xedap.vn chain that comprises 22 bicycle stores. The company has alsoexpanded its reach to e-bikes with the introduction of Xedien.vn.
Xedap.vn has been financed recently by Excelsior Capital Asia to expand itspresence in the country. Supported by the fund, the bicycle chain has aimed toreach 100 stores in the next few years.
Some experts were concerned that AVACycle and Xedap.vn would price small-sizedretailers out of the market with their deep discount policy. However, PeterNguyen said it would not be the case.
He asserted that over 2,300 stores owned by small-sized retailers wouldcontinue to hold grounds despite the entry of Xedap.vn because Vong Xanh doesnot aim to achieve 'something big' but simply try to bring 'something new' tothe table.
Meanwhile, Doan Van Hieu Em revealed that the shop-in-shop approach has allowedAVACycle to substantially cut its operational costs and rents. The money savedhas been spent on discounts and sale promotions, which, he believed, would helpthe chain secure around 40% of the market shares in the short term.
Normally, the period from July to December is the peak season for bicyclesales. However, the situation was different last year as bicycle sales in Q3and Q4/2022 fell by more than 50% compared to the same period in 2021. The fallin sales was caused largely by the global economic recession.
Experts believed that the downturn would be short-lived and a boom in saleswould be within sight for bicycle retailers. For this reason, manyinternational funds have begun to pour their money into the bicycle marketdespite the recession./.
VNA
