Bright prospects for growth in bicycle market | Business

A Xedap.vn chain store in Ho Chi Minh City. The chain aims to raise its number of stores to over 100 in the next few years. ( Photo: xedap.vn)

Hanoi (VNS/VNA) – With more Vietnamese commuters
choosing to cycle, the prospects for the bicycle market look promising with
great opportunities for retailers.

Peter Nguyen, general manager of Vong Xanh JSC, revealed that the market is
growing by 15% annually with about 2.5 million bicycles sold every year, equivalent
to aggregate revenue of 7.5 trillion VND (320 million USD).

Children’s bicycles dominate sales in the market over the past few years as
Vietnamese parents are willing to buy up to three bicycles for their children
when they are between one and 15 years old.

The general manager underlined three factors that would continue to fuel the
market growth in the long term.

The first factor involves the rising middle class in the country, which would
drive a new trend toward cycling for health, increasing the demand for sports
bicycles.

Another factor is the addition of bike lanes to urban streets, which would
encourage bicycle commuting and increase the number of cyclists in big cities.
As more people stop using their cars and shift to greener means of transport,
bicycle sales would rise.

The last factor centres around the expansion of public transport systems, a
trend that drives motorbikes out of big cities. With the decline of motorbikes,
commuters have no choice but to rely on bicycles for short-distance travel,
which is good news for bicycle sellers.

The bicycle market is lucrative but fragmented. Big companies hold just 10% of
the market share whereas 90% falls to a large number of small-sized retailers.

Mobile World JSC participated in the market in 2022 with the launch of the
AVACycle chain that comprises 158 bicycle stores.

Mobile World CEO Doan Van Hieu Em revealed that each store grossed over 50
bicycles in daily sales just a few days after its launch.

As such, AVACycle is expected to make around 400 billion VND (17 million USD)
in revenue in its first year of operation and continue to grow steadily year by
year.

Another retail giant in the market is Vong Xanh JSC, which moved in 2016 and
owns the Xedap.vn chain that comprises 22 bicycle stores. The company has also
expanded its reach to e-bikes with the introduction of Xedien.vn.

Xedap.vn has been financed recently by Excelsior Capital Asia to expand its
presence in the country. Supported by the fund, the bicycle chain has aimed to
reach 100 stores in the next few years.

Some experts were concerned that AVACycle and Xedap.vn would price small-sized
retailers out of the market with their deep discount policy. However, Peter
Nguyen said it would not be the case.

He asserted that over 2,300 stores owned by small-sized retailers would
continue to hold grounds despite the entry of Xedap.vn because Vong Xanh does
not aim to achieve ‘something big’ but simply try to bring ‘something new’ to
the table.

Meanwhile, Doan Van Hieu Em revealed that the shop-in-shop approach has allowed
AVACycle to substantially cut its operational costs and rents. The money saved
has been spent on discounts and sale promotions, which, he believed, would help
the chain secure around 40% of the market shares in the short term.

Normally, the period from July to December is the peak season for bicycle
sales. However, the situation was different last year as bicycle sales in Q3
and Q4/2022 fell by more than 50% compared to the same period in 2021. The fall
in sales was caused largely by the global economic recession.

Experts believed that the downturn would be short-lived and a boom in sales
would be within sight for bicycle retailers. For this reason, many
international funds have begun to pour their money into the bicycle market
despite the recession./.