ly smaller than the company promised as recently as 2020. Aeon made its southern Vietnam debut in Ho Chi Minh in 2014, choosing a site at Tân Phú Celadon, 5km from the city centre, a suburb almost exclusively occupied by local Vietnamese. That move perplexed commentators at the time but has since emerged as a stroke of genius because unlike rival international grocery retailers that have struggled to build a presence in the country – Germany’s Metro and France’s Auchan both failed spectacularly – Aeon made a point of targeting Vietnam’s urban working and middle classes.  At Celadon, Aeon opened a hypermarket, aggregating a collection of local retailers and new-to-market Japanese brands it had experience with at home, intentionally building its own shopping centre destination rather than leasing space in someone else’s. The strategy afforded complete control over its format, adjacencies and rental costs in a market where traditional retail leasing practices differ markedly from those considered the norm in more economically mature nations.  Small retail tenants were encouraged to sign up with attractive turnover-based rentals to minimise their risk. As in all new shopping centre developments, some succeeded, while others – including a Western-styled tea and coffee cafe – couldn’t entice enough of the local catchment to achieve viability. That ‘try and see what works’ philosophy has helped create a business model the company has now begun to venture into new territories with.  This year, after establishing six malls in Ho Chi Minh City, neighbouring industrial province Binh Duong and the capital Hanoi, Aeon is venturing into locales with less affluent consumers, confident in the structural integrity of its localised offer.  In February, work commenced on a US$169 million 8.62ha Aeon Mall in the commercial centre of Hue, a historic city of 450,000, a few kilometres inland from Vietnam’s central coast, 700km south of Hanoi and 1100km north of Ho Chi Minh City. The site is expected to be trading by the end of this year.  In May, the company turned the first sod on a mall at Tan An in the Mekong Delta, 50km south of Ho Chi Minh, slated to be its eighth mall when it opens next year, located in the new administrative centre of Long An province, adjacent to National Highway 1A. Perhaps more than any of its existing centres, the Hue and Mekong Delta developments will be the company’s greatest litmus test of its Vietnamese business model.  More than malls Vietnam has grown to become Aeon’s second key market after Japan and the company is this year investing in the development of not only new properties but expanding its e-commerce services – which it relaunched last October – and private label ranges. Aeon Eshop, its online business, was revamped last October and it is eyeing a 20 per cent increase in turnover this year and a further 50 per cent “in the following years”.  Aeon has been quietly rolling out supermarkets under its MaxValu brand and plans to open three more this year. It will also continue an upgrade program of the southern Vietnamese Citimart store network it acquired in 2014 and continue to expand the chain.  By the end of this year, Aeon expects to have 160 operating sites across its malls, convenience stores, specialty stores and other services in Vietnam, including shopping malls, supermarkets, specialty stores, general merchandise stores and supermarkets, convenience stores, and children’s play areas.   “Aeon Vietnam plans to open a variety of new shopping destinations with many different models and scales,” Furusawa Yasuyuki, a member of the board of executive directors of Aeon Group (Japan) in charge of the Vietnamese market, and general director (the local term for the senior-most executive of a company) of Aeon Vietnam, said in a statement on May 3. “Not only in Aeon shopping centres. We will also expand and develop Expanded at other partners’ shopping centres. Although different in area, all of Aeon Vietnam’s retail locations fully meet customers’ needs [including] food, household appliances, mothers and baby, and fashion,” he said.  Aeon seems to be mapping a steady course, exerting more patience than its failed prospective European rivals. Last year – one Yasuyuki described as “a stepping stone to accelerate market expansion in 2024″ – sales increased by between 4 and 5 per cent over 2022 and the number of customers it served rose by 3 to 4 per cent. Now the company will pursue growth through the integration of its three core business pillars in the market: shopping mall development, general retail business, and financial services. “To realise this goal, Aeon aims to increase its touchpoints with Vietnamese consumers through the accelerated opening of new business locations, maximising the use of digital technology, developing private label products such as TopValu, Home Coordy (furniture and household items), and My Closet, and continuing to collaborate with the community for sustainable development,” the May 3 statement said.  But the company appeared to temper expectations acknowledging that the economy remains challenging, affected by the global economic context, predicting consumers will extend the trend of thriftiness through this year. “Although the retail market still has room for growth in 2024, a sudden increase in figures is unlikely.” Still playing catch-up It’s fair to note that even with the bold expansion talk of this year, Aeon remains well behind its projected scale in Vietnam. In late 2014, after opening Celadon, Aeon partnered with two struggling local grocery chains – Hanoi-headquartered Fivimart and Ho Chi Minh City-based Citimart. Fivimart had 20 stores at the time, Citimart 26 and the company said then it would create a network of 500 convenience stores and small supermarkets branded Aeon Citimart by 2025. “We had been seeking cooperation that can create the difference for Citimart stores to compete with other domestic and international retailers and Aeon is one of the first names we thought of,” Lam Minh Huy, chairman of Dong Hung Co, which operates the Citimart chain, told the Saigon Times newspaper at the time. Initially, Aeon did not invest in the two retailers, however, things changed in January 2015 when it took 49 per cent of Citimart and 30 per cent of Fivimart. The reason for the investment could have been made clearer, however, Aeon said the deals would allow it to increase its working knowledge of Vietnam’s FMCG retail market and of procuring stock locally. Citimart and Fivimart would gain from Aeon’s expertise in supply chain logistics, quality control and modern retailing disciplines. Three years later, Aeon sold the Fivimart business – by then still only 23 stores strong – to local operator Vingroup, (which has since sold its entire convenience store business to food and industrial conglomerate Masan Group) with all stores to be converted to the Vinmart brand.  In March 2020, just as Covid took hold of Southeast Asia, Aeon said it planned to invest $2 billion into the market. With just eight malls trading – half the number promised as recently as January 2022 – and 160-odd stores, and a failed Fivimart plan, Aeon’s progress in Vietnam appears on the surface to have been tortured, at best.  But with considerable learnings over the past 10 years, the company – notwithstanding $2 billion in capital to invest – is finally beginning to show signs of progress.