The Participation of the Poor in Supermarkets and other Distribution Value Chains, Viet Nam, M4P, 2005

Description
Although the development has not been as fast paced as in other countries in Asia, supermarkets are an increasingly common part of commodity trade in Viet Nam. In late 2001, there were 70 supermarkets in Viet Nam, 32 in Hanoi and 38 in Ho Chi Minh City, while there were none before 1990. By June 2004 the number of supermarkets in Hanoi reached 55 supermarkets (plus 9 wholesale centers, including Metro), and there were 71 supermarkets in Ho Chi Minh City alone by 2005.

The development of these innovative distribution chains goes together with activities which add much value to the business of food distribution. Thanks to economies of scale, they also have a potential for cutting distribution costs and sell more affordable products to consumers. This development represents income generation opportunities for a country like Viet Nam where poverty alleviation is a major policy goal. The challenge is how to ensure that the value added by these new enterprises can effectively be distributed to the poor and how to maintain alternative distribution chains which can generate more value for the poor.


Methods for info gathering
The study assesses conditions for an increased involvement of the poor in the food value chains driven by supermarkets and other value-adding outlets. The trends of the different distribution chains were analyzed through the gathering of secondary data. Surveys on poor consumers' access to different retailing points were made in Hanoi, Ho Chi Minh City, and Moc Chau, as well as comparison of prices between the different points of sale in these cities. Four case studies investigated poor farmers' and traders' participation in distribution value chains. In-depth interviews of stakeholders along the chains, as well as census of traders, investigated (i) the patterns of horizontal and vertical coordination that link the poor to the markets, (ii) the distribution of costs and benefits between the farmers and the traders along the chains, (iii) the respective advantages and drawbacks involved in supplying different types of outlets, and (iv) the employment impact of the
different chains.

Summary of results
Markets and street vendors are still the major players in food distribution, when considering quantities sold, areas of sale, as well as employment. Yet supermarkets are growing fast all the more since the Government has a positive attitude towards them, in particular for reasons of food safety and modernization, in opposition to a negative attitude towards street vending and
informal markets. Yet street vending and markets generate more employment by volume of business than supermarkets, especially for the poor. They are also the main points of sale for the poor consumers, who rarely purchase in supermarkets, because of price and distance constraints. This situation may change though if prices in supermarkets go down, as already reflected by the higher frequentation of supermarkets in Ho Chi Minh City as compared with
Hanoi.

Poor farmers have no direct access to supermarkets because of the requirements in terms of safety (for vegetables), quantities, and conditions of delivery (for all products). Yet poor farmers can be indirect suppliers of supermarkets through belonging to (or contracting with) farmers' associations supplying supermarkets. The supply of supermarkets is mostly appreciated by farmers because of a higher stability in prices and quantities purchased than in traditional chains, yet the situation is reported to change with the increase in supermarket competition. Shops represent another type of outlet for which farmers' associations benefit from the same advantages than supermarkets with less constraining requirements. Small-scale suppliers can get more value added by the promotion of farmers' associations involved in quality development and control through training and credit programs. Propositions aimed at maintaining the diversity of retail trade are made, including tolerance of street vendors in defined areas.



Associated Activities and Documents
Implementation
»	Making Markets Work Better for the Poor (Implementation), Viet Nam, Laos, Cambodia (ADB, DFID) 2003-2007