Auchan – don’t rate a company when it succeeds, look at when it’s fail

On 16 May 2019, after 5 years entering Vietnam, the France biggest retailer Auchan has officially announced to withdraw from Vietnam. The brand will sell all of its stores to an unpublished partner after a long period of time not making profit.

Beside of some “not very good” image of Vietnam’s consumers in the last days of this supermarket chain. The act of this brand with their employees in the transition times has made the public to think back about company culture in general and ethical of the HRM in particular.

So, what happened?

Vietnam’s consumers “wipe out” Auchan on its last days

Reasons leading to Auchan’s fail in Vietnam?

Founded in 1961, with headquarter in France and working in many industries include FMCG, commercial retail, real estate, banking, e-commercial, etc.

In general, there are three main reasons lead to the fail of Auchan in Vietnam.

Auchan leaving Vietnam after 5 years

Competitors

Since 2012, Vietnam witnessed the invading of a series of retailers and large brand entering Vietnam.

The competition for market share in Vietnam become more brutal with the strong investment of brands from Japan (AEON), Korea (Lotte), Thailand (TCC Holding – Mega Market), Vingroup (Vinmart), etc.

This leading to a decreasing in sales revenue and brand’s awareness when Auchan have to change their brand’s name 2 times (from S.mart to Simply and final is Auchan) before closing.

The competition of retail industry in Vietnam is very brutal

Business strategy

In 2014, Auchan entering Vietnam and starting their business by collaborating with big real estate company to build supermarket inside their building, apartment.

At the beginning, this seems to be a very smart move when Auchan can take advantages from the residents of the building. But in return, when located inside apartments, it’s will be very difficult to approach consumers in a far distance.

Moreover, the customer segment of Auchan is middle to high level. While GDP of Vietnam is still low (below 2.500 USD/ people), if Auchan comes to Vietnam in 7 -10 years later, when the GDP increased to 5.000-7.000 USD/ people, that would be a different story.

One more reason, is Auchan’s brand awareness. With Vietnamese, products from U.S or Europe are earn the hashtag of “best quality”. But Auchan cannot take advantage of their country’s brand name. Which has been used very well by Thailand, Japan and Korea brands.

Auchan build their supermarket right below building, apartment.

Market cultural

The retail trending of Vietnam is combination forms of entertainment, eating and shopping in one place like AEON Mall, Lotte Mart, Vincom.

The individual market will hard to compete, one realistic example is Parkson Mall of Malaysia which have to withdraw from Vietnam in 2018 after 13 years entering this market.

Shop&Go, Parkson, Metro and Auchan are four “big face” have to leave Vietnam after long period of time losses

Humanity and integrity withdraw

In recent days, the “online community” of Vietnam has had very good feedback on the action of Auchan leaders board when they are helping their employee to redirection their job after the announcement to close the company.

Particular, the Human Resources Director of Auchan – Tran Phuoc Tuan has written a letter on LinkedIn – the biggest social network for job search and recruitment – to call for assistance in looking for job for his employee. Mr.Tuan also posted a Google docs link to help employers to share their recruit positions.

Mr.Tuan letter on LinkedIn

The Auchan’s director – Arnaud Bouillet – also give his feedback and recommendation for his employee and sharing their CV to his network.

Mr. Arnaud Bouillet sharing his employee CV to his network

This kindly act had lead to the call to support Auchan’s three remained supermarkets. Although all of the brightness situations, the sadness is that they still keep the plan to withdraw from Vietnam in June.

Auchan will leave Vietnam on June 2019

For people who following the “value investment” style of Warren Buffet, then in Auchan case, the brand value of them has shown through the way they treat their employee when it comes to an end. Because it is more important than the way the company treat their employee when it’s on the growing peak.

If Auchan comes back to Vietnam one day, I believe they will be very welcome by customer and candidates who looking for job.

What do you think?

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.