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Vietnam among world’s most attractive retail market
The Hanoitimes – Vietnam is one of the world’s most attractive markets for retail investment, ranking sixth in the Global Retail Development Index (GRDI) of A.T. Kearney in 2017.
Many foreign retailers have flocked to the market in the past few years. It was estimated that foreign investors opened more than 100 new convenience stores in Vietnam last year alone.
Up to now, Japan’s Family Mart has 130 stores in Vietnam, and it plans to open another 700 stores by 2020.
Up to now, Japan’s Family Mart has 130 stores in Vietnam, and it plans to open another 700 stores by 2020.
Japan’s 7-Eleven also entered Vietnam in June this year. It will open 100 stores in three years and 1,000 stores in the coming decade.
South Korea’s Lotte Mart plans to open 60 stores in Vietnam by 2020.
Meanwhile, South Korea’s GS25 will launch its first shop in Ho Chi Minh City by the end of 2017. It is planning to open 2,500 stores in ten years. Japan’s Takashimaya plans to open a 15,000-square-metre store in HCM City.
Currently, there are 800 supermarkets, 150 shopping malls, 9,000 traditional markets and about 2.2 million retailers in Vietnam. Convenience stores and mini-marts are the fastest-growing segments in this market.
Investors can get a much higher return on convenience stores than on traditional supermarkets or hypermarkets, and the initial investment is much lower. Furthermore, it is easier for investors to obtain business licenses for convenience stores and mini-marketplaces than for supermarkets.
According to experts, there remains large potential for the future growth of Vietnam’s retail market.
Vietnam has a population of 96 million. There are currently 1,765 convenience stores in Vietnam. That is to say, there is approximately one convenience store per 54,400 Vietnamese citizens. To put this into perspective, there is one convenience store per 24,900 persons in China, one per 2,300 persons in Japan and one per 2,100 persons in South Korea as at the end of 2016.
Vietnamese prefer to shop in convenience stores. More than one-thirds of households in Vietnam has shopped in convenience stores at least once in the past year. The growth rate of modern distribution channels from April 2016 to March 2017 was 7.7 percent, higher than the growth rate of 6.1 percent of the traditional distribution channels.
According to a Ministry of Industry and Trade’s draft strategy on domestic trade development, the revenue of Vietnam’s retail sales market will reach over VND11 quadrillion (US$484.58 billion) by 2020 and nearly VND44 quadrillion by 2035.
According to the draft, the annual growth rate (excluding the price factor) of the country’s total revenue from retail sales of goods and services for the period from now to 2020 will average at 13 percent per year, and rise to 14 percent in 2021-2025. The value will reach some VND5.8 quadrillion by 2020 and VND11 quadrillion by 2025.
With the major foreign investment in the domestic retail sector, local brands need to take efforts to compete with foreign retailers.
More than 70 percent of convenience stores in Vietnam belong to foreign companies. Although local brands such as have more stores than foreign names, their market share is much lower.
To compete with foreign brands, Vietnamese producers and distributors should focus on meeting customers’ requirement. Convenience and efficiency would be the top demands for convenience stores.
Meanwhile, the government should take actions to help local brands. It needs to help turn the distribution chain from input to output. It should also encourage larger businesses to unify small and medium-sized distributors within the national retail value chain.
In addition, according to retail experts in the industry, large businesses in the country also need to invest in developing e-commerce market because this is the inevitable trend of the world.
South Korea’s Lotte Mart plans to open 60 stores in Vietnam by 2020.
Meanwhile, South Korea’s GS25 will launch its first shop in Ho Chi Minh City by the end of 2017. It is planning to open 2,500 stores in ten years. Japan’s Takashimaya plans to open a 15,000-square-metre store in HCM City.
Currently, there are 800 supermarkets, 150 shopping malls, 9,000 traditional markets and about 2.2 million retailers in Vietnam. Convenience stores and mini-marts are the fastest-growing segments in this market.
Investors can get a much higher return on convenience stores than on traditional supermarkets or hypermarkets, and the initial investment is much lower. Furthermore, it is easier for investors to obtain business licenses for convenience stores and mini-marketplaces than for supermarkets.
According to experts, there remains large potential for the future growth of Vietnam’s retail market.
Vietnam has a population of 96 million. There are currently 1,765 convenience stores in Vietnam. That is to say, there is approximately one convenience store per 54,400 Vietnamese citizens. To put this into perspective, there is one convenience store per 24,900 persons in China, one per 2,300 persons in Japan and one per 2,100 persons in South Korea as at the end of 2016.
Vietnamese prefer to shop in convenience stores. More than one-thirds of households in Vietnam has shopped in convenience stores at least once in the past year. The growth rate of modern distribution channels from April 2016 to March 2017 was 7.7 percent, higher than the growth rate of 6.1 percent of the traditional distribution channels.
According to a Ministry of Industry and Trade’s draft strategy on domestic trade development, the revenue of Vietnam’s retail sales market will reach over VND11 quadrillion (US$484.58 billion) by 2020 and nearly VND44 quadrillion by 2035.
According to the draft, the annual growth rate (excluding the price factor) of the country’s total revenue from retail sales of goods and services for the period from now to 2020 will average at 13 percent per year, and rise to 14 percent in 2021-2025. The value will reach some VND5.8 quadrillion by 2020 and VND11 quadrillion by 2025.
With the major foreign investment in the domestic retail sector, local brands need to take efforts to compete with foreign retailers.
More than 70 percent of convenience stores in Vietnam belong to foreign companies. Although local brands such as have more stores than foreign names, their market share is much lower.
To compete with foreign brands, Vietnamese producers and distributors should focus on meeting customers’ requirement. Convenience and efficiency would be the top demands for convenience stores.
Meanwhile, the government should take actions to help local brands. It needs to help turn the distribution chain from input to output. It should also encourage larger businesses to unify small and medium-sized distributors within the national retail value chain.
In addition, according to retail experts in the industry, large businesses in the country also need to invest in developing e-commerce market because this is the inevitable trend of the world.
Source: http://www.hanoitimes.vn/economy/2018/03/81E0C339/vietnam-among-world-s-most-attractive-retail-market/