Vietnam: E-commerce as the trend going forward
Last July, leading Korea retailer GS Retail set up a joint venture namely GS25 Vietnam with Son Kim Group, one of Vietnam’s leading privately owned retailers to launch its first convenience store in Ho Chi Minh City on January 19. GS25 Vietnam is set to dominate the retail market with plan to open more than 2,500 stores in the next 10 years.
Also in this month, Chinese electronics and software company Xiaomi cooperated with Digiworld of Vietnam to open the first Mi Store in Vietnam, where all Xiaomi’s products will be sold, including smart phones, LED light, rice cooker, vacuum, and so on. It is expected that by the end of 2018, Mi Store will be available in 15 cities in Vietnam.
These two examples above showed the attraction of Vietnam’s retail market, which is fast becoming the ideal destination for world leading’s retailers. Revenue from the retail sector in 2017 is expected to reach US$ 130 billion, up 10.9% compared to the same period of last year, according to source from the General Statistics Office of Vietnam.
However, for a country with population of 90 million, the current number of 1,000 convenience stores, a few hundreds of super market and shopping malls are too small, said a trade expert. As such, this market segment will be a promise land for foreign investors. On the other hand, Vietnam has diversified agricultural products, which is a favorable condition for the implementation of modern retailing methods.
The presences of foreign retailers are putting pressures on domestic companies to improve their competitiveness. In 2018, Vietnam’s retail market will continue its status of one of the fastest growing market in the world iwth some notable trends. Specifically, the fast-moving consumer market in rural area recorded a growth rate of 7% in 2017, doubling the rate in urban area, based on a study conducted by Nielsen market survey company. For bakery market, the rural area also continues its strong growth rate of 15%, as such, rural areas have become the main market for some brands.
Nowadays, more and more customers are prepared to shop online, due to its convenience and comfortability. The government also set target for retail e-commerce sales at US$ 10 billion by 2020, accounting 50% of total retail sales.
The strategy for domestic trade until 2025, with vision to 2035 proposed by the Ministry of Industry & Trade estimated that the annual average growth rate of total retail sales and services from now on until 2020 is expected at 13% per year, which will be increased to 14% in period 2021 – 2025.