Mr. Nguyen Duc Tai confidently “crushed” the competition with the ratio of space rental cost to revenue at TGDD accounting for only 2%, so how much is that number in FPT Retail?
In an interview in 2017, FPT Retail Chairman Nguyen Bach Diep, then CEO, revealed the secret of how to quickly and effectively expand the chain in just 2 years. Despite being born late, the retail chain FPT Shop quickly caught up with the “elder” Mobile World.
“We calculate that we only open 2019 as a stop. How to open stores in the next 2 years? We observe the competition, select all the shops of TGDD have good revenue but we don’t have a shop in that area. With that list, in an area where we don’t have a shop and your team’s sales are high, we will set up shop“, shared Mrs. Nguyen Bach Diep.
Nearly 3 years later, the business comparison between these two retail giants is even more interesting when appearing in a conversation between the president of Mobile World and a leader of FPT in the Shark Tank program. Forum 2020.
In this sharing session, MWG Chairman Nguyen Duc Tai shared the story of the ratio of space rental costs to revenue of Mobile World and a Chinese retail business.
“A shop of mine is 100m2 selling 1000 phones a month, their shop is 300m2 selling 700 phones a month. I said he was ‘death for sure’, because the rent over revenue is 20-25%. He did so, Samsung sold him to him for twice as much profit to pay. Meanwhile, my rent on sales is just under 2%“, shared Mr. Tai.
The 2% figure continued to be repeated by Mr. Tai when compared with the cost of e-commerce businesses to deliver goods to customers.
The sharing of the Chairman of Mobile World surprised an audience who was a leader of FPT Corporation.
“My name is Vinh. I work at FPT, also with Mr. Tien, in the business department of the corporation. From the perspective of business leaders, I would like to have 2 small questions. One is that Mr. Tai shares the cost of renting space for the entire Mobile World system, Dien May Xanh and Bach Hoa Xanh account for less than 2% of revenue. This number is truly amazing. Of course, this is not a question for the FPT Shop chain“, this person admired the data given by Chairman Nguyen Duc Tai.
Question and answer session between Chairman Nguyen Duc Tai and FPT leaders.
The President of Mobile World responded: “2% belongs to Mobile World and Dien May Xanh, not Bach Hoa Xanh. Because the average revenue of a Bach Hoa Xanh shop is only about 1.2-1.3 billion VND (in 2021 – PV). At this rate, that level should rise higher. Why is it actually so low? Simply because my revenue is better than the rest of the world. Two shops opposite each other Mobile World’s revenue is 1.5 or even 2 times higher than that of competitors. If Mobile World is 2%, I wish you had 4-5%. I went back and asked my internals to see if it was correct.
That doesn’t mean you push landlords, make it difficult for them, make them rent cheaply because this is a negotiable relationship, no one can beat anyone. He even feels like he pays 10-15% more than others. Because I’m taking strategic positions, I pay more to take it. Because the revenue per square meter of that space is much higher, the cost ratio is low.”.
Comparing the financial statements of FPT Retail, it can be seen that Mr. Tai’s estimate is also close to match. According to the notes to FPT Retail’s consolidated financial statements for the year 2016-2021, the company’s store rental and repair costs are around VND208-658 billion. Compared with net revenue, the cost of leasing space of FPT Retail ranges from 1.9% – 3.2%. If calculated as a percentage of total selling costs, the cost of leasing premises of FPT Retail ranges from 22-32%.
In the consolidated financial statements, The Gioi Di Dong did not clearly separate rental costs like FPT Retail.
at Blogtuan.info – Source: genk.vn – Read the original article here
