The Hanoitimes - The economic downturn along with many
operating difficulties has greatly reduced purchasing power, resulting in a
decline in the country’s retail sector in the last four consecutive years,
according to the 2012 A.T. Kearney’s Global Retail Development Index (GRDI).
Due to several factors, Vietnam
has lost its shine as an attractive location for retail investment since 2009.
The country used to be among the top 30 emerging retail markets in 2008.
At that time, the country was
valued by international economic experts as a strong economy having abundant FDI
capital and a young population who favored fast spending.
However, in just one year, the
country fell to 6th place in 2009, 14thin 2010, 23rd in 2011, and 32nd in 2012.
According to A.T. Kearney’s
annual GRDI report, the cause of this slide is the macro-economic policies that
are unpredictable and which affect purchasing power; and obstacles and barriers
faced by investors when applying for business licences.
Moreover, Vietnam’s retail sector
has poor planning, resulting in ineffective investments and shortage of
resources, manpower and a proper distribution network.
While Thailand and Indonesia have
seen strong consumer growth this year, Vietnam saw a downslide. Experts say it
will take two to three years for Vietnam’s retail sector to recover like in
2008 and an additional 10-15 years to keep pace with other countries in Asia.
One of the disadvantages is
costly rental space and difficulty in regaining consumer confidence. Most
people have tightened spending and prefer bargain sales, for which enterprises
have to continuously launch promotional programs, offer discounts and give
gifts to keep the consumer coming back to stores.
Companies are facing stiff
competition and only enterprises with financial potential can best satisfy
customer needs and make substantial profits, as in the case of Big C, Metro,
Co.opMart, Vien Thong A and Nguyen Kim supermarkets.
Taking into account the last six
years, this is the first year to see such a sharp decline in purchasing power
of electronic items, despite a year-end reduction sale of 10-50%. However, food
and essential commodity businesses are maintaining optimism, though markets are
showing no positive signs.
However, enterprises should not
be discouraged and consider Vietnam’s GDP growth at 5% and the young population
accounting for 50% in the country. Sales of consumer appliances in Vietnam
registered a 15% rise in 2013 and 100% in smart phones, said a recent report
from GFK Group, one of the world’s leading market research companies.
However, enterprises have to
improve their financial and management ability and services. In addition to
stimulating purchasing power, enterprises must cooperate with each other to cut
costs in rentals and transportation fees.
Major brands such as Sony,
Samsung, and Panasonic have coordinated with retailers to launch promotional
programs that are tempting and can lure consumers.
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Health care and Life Science with expertise in ASEAN 's area. We are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at christian.siodmak@gmail.com. Many thanks.
No comments:
Post a Comment