Vietnam - Vietnam retail revenue to lift 23% in 3 years

Vietnam's total retail revenue would increase by 23 percent per year between now and 2014, according to a report by AT Kearney. This meant the Vietnamese retail market would offer many opportunities for both domestic and foreign retail businesses.

The report "Vietnam Retail Market Forecast to 2014" said that modern retail channels would play a crucial role in future growth, improving their position in the market. Increasing purchasing power and changing lifestyles were some of the key growth drivers in the country's modern retail market, it said, adding that during the next few years, a short wave of consolidation would emerge as foreign retailers tried to consolidate their position and deepen their market penetration.

The modern retail market would be the key distribution channel in Vietnam in the near future due to its huge consumption market of nearly 90 million consumers, AT Kearney's report remarked. Vietnamese consumers' shopping habits were changing, with more spending in modern retail outlets due to convenience and health-related issues. Many consumers said that modern retail outlets gave them good access to new products, more confidence in food safety, and clean facilities.

Vietnam's total retail revenue in 2011 reached nearly 2 trillion dong or approximately US$95 million, an increase of 29.3 per cent in comparison with the previous year, and contributing 15-16 per cent of the Gross Domestic Products (GDP), a promising figure in the context of economic growth, according to the Ministry of Industry and Trade (MoIT).

The country currently has 636 supermarkets, 120 commerce centres and over 1,000 convenience stores. Experts said this figure still did not meet the demand. As a result, Viet Nam's retail market holds many opportunities for both foreign and domestic investors.

Competing with foreign retail businesses would be a big challenge for domestic companies, said MoIT. Leading international retail groups have poured large investments into their business expansions in Vietnam with the aim of gaining more market share. This can be seen through the opening of more outlets and trade centres to compete with local retail businesses.

Leading brands like Metro Cash & Carry opened 10 new trade centres in 2011 while Parkson added seven new shopping centres in big cities across Vietnam. Big C invested $14 million in a new trade centre in the central province of Thanh Hoa late last year, raising its chain in Vietnam to 17 which it plans to increase to 29 supermarkets by 2013. Japan's Aeon retail group decided to invest $101 million on a chain of Jusco trade centres and supermarkets across Vietnam, and with initial investment capital of $80 million, South Korea's E-Mart Group has signed a joint venture with U&I Group to put their first project into operation this year.

Vietnamese retail businesses also have plans to gain more market share having tried their best to stand firm in the local market. Co.op Mart will open six new supermarkets this year, increasing its network to 57 across the country. The electronic retail company dienmay.com also said it would open five new stores this year, bringing its total stores to 12.

Since the country opened its market to 100 per cent foreign retailers in early 2009, with the entry of the likes of Metro Cash&Carry and Lotte Mart, modern retail formats are growing more prominent in the country. Some foreign retailers are also expanding their distribution networks to Viet Nam's rural regions.

VNA

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