A proper approach to mom & pop shops market for metro cash & carry

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Chapter 1: Introduction

1.1. Background:

Metro Cash & Carry (MCC) Vietnam is a subsidiary of Metro Cash & Carry group

originated in Germany. This is a typical supermarket specializing in wholesales

business. MCC Vietnam classifies customers into three groups: HoReCa (Hotel￾Restaurant-Caterer), trader (retailers and wholesalers), and CBU (Corporate Business

Units including Services Providers, Companies and Offices), in which the trader

accounts for 44% of the total business (with subgroup, food trader: 31%, and non-food

trader: 13%), while HoReCa’s and CBU occupy 15% and 51%, respectively. To trader,

there are many types of customer, such as a big grocery, Mom & Pop (M&P) shop1

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Minimart, supermarket, fruit grocery, etc. The main function of MCC has played a

distributor to distribute products of manufacturers to wholesalers, and retailers. MCC

was held in Vietnam since 2002, and has been popular then. Evidently, the turnover of

the M&P shops conquered by MCC annually grows about 30% on average from 2005 to

2009, with its share of 13% in total, and of 39% in trader group. Accordingly the sole

sale of M&P shops in 2007 is 733 billion VND. As a result, M&P shops are really

worthy of taking into account, they are quite potential market for MCC.

1.2. Problem statement

Due to being a wholesale company, MCC Vietnam concentrates on customers who buy

a big amount per visiting, e.g. wholesalers and big retailers. In order to attract

customers, MCC usually gives promotions, e.g. discounts to customers and particularly

put them on a top priority to get a big quantity whenever attractive trade promotions

run. Besides, MCC is expected to attract customers to come to MCC’s stores rather than

MCC must go to them directly to ask the purchasing contract. Although MCC already

set up the delivery department, it only serves for the selected HoReCa and traders

while the M&P shop is not included. It means that MCC has not yet derived any

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See its definition in section 3.3

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strategy to approach M&P shops, while other suppliers do. Based on the internal report

of MCC, the visiting frequency and average sales per visit of the M&P shops are not

interesting enough. The initially preliminary rationale behind is that the M&P shops are

normally quite busy for their business, so it is not easy for them to manage time to visit

MCC. This is also a disadvantage for the M&P shop to get sale promotion programs of

MCC. Besides, MCC has not concerned delivery services from its business place to

M&P shops, while its competitors, such as wholesalers and monopoly suppliers do it. As

a result, MCC itself loses opportunities to pick up its share of wallet of M&P shops.

Based on problems just mentioned, objectives of thesis are shown as follows. Findings

of thesis will be helpful for MCC toward appropriate business strategies to explore the

M&P shop market.

1.3. Objectives

− To find out perception of M&P shops on MCC

− To identify M&P shops’ need and expectation to be a partner.

− To suggest strategies with respect to the main supplier of M&P shops,

pulling M&P shop more frequently visiting, and pushing M&P shops taking

account of purchasing more products when visiting MCC.

1.4. Research issues and questions

Based on problem statements already mentioned and objectives concerned, some

questions are as follows

- Why is the M&P shop important for MCC?

- How does MCC attract the M&P shop?

- What disadvantages and advantages do MCC have?

- What are MCC’s competitors doing to approach the M&P shops?

- What kind of services does the M&P shop expect from MCC?

- What is the best solution to improve the business performance of MCC?

1.5. Data collection

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In order to meet objectives, secondary and primary data are concerned. Secondary data

is sourced by the internal reports, website. Additionally, journals are also searched to

look for relevant researches done and then select appropriate approaches consistent

with the objectives of thesis. To primary data, in depth interview was conducted on five

persons who are specialized in the sector, e.g. some ones involved in marketing

department, operational department, and big and representative M&P shop owners.

Questions engaged in this term pay attention to discussing with those five persons about

their business, together with disadvantages, advantages that they got from MCC. In

general, the purpose of the in-depth interview is basic to develop the questionnaire for

directly interviewing. Yet, based on the in-depth interview, the questionnaire is

produced after that. The pilot survey was then conducted on ten M&P shop owners,

which to look for the final and complete questionnaire. Respondents who are

interviewed must be M&P shop owners, must have their business time at least one year

already started. The survey is conducted in Ho Chi Minh city, where District 2, District

6, and District 12 are mainly concerned and respondents are randomly selected. The

sample size expected is 100 observations. Because most of M&P shop owners are quite

busy, not easy to contact. 100 hard copies of questionnaire were directly sent to them.

There are 80 samples returned, completely filled, and sufficient.

1.6. Scope of research

The research conducted in Ho Chi Minh City, respondents interviewed are mainly

responsible for their business, e.g. owners, managers, who have engaged in business

above one year. Because of time limitation and unwillingness of M&P owners and

managers to accept the questionnaire for interviewing, the number of samples is not so

big, just 80 samples. Hopefully the result is partly a representative voice for the project.

1.7. Methodology

Descriptive analysis is used to analyze the raw data collected, together with secondary

data. Additionally, SWOT analysis is also applied.