Potential market

The IMF and the World Bank have also said Vietnam’s economy is recovering very well.

According to IMF, Vietnam is the only country in Asia and Southeast Asia with an increased growth forecast. 

In 2023, the IMF reduced its forecast to 6.7% due to the high growth rate of 2022, but this is still a high rate compared to other countries in the region.

According to the IMF, policies related to COVID-19 prevention have helped Vietnam maintain a low mortality rate and stabilize the economy. According to the World Bank, the growth of the Vietnamese economy in the second quarter of 2022 was +7.7%. Industry has also experienced tremendous growth.

According to SSI Research, Vietnam’s macroeconomic data in August was more positive than expected. The breakthrough came from the service and manufacturing sectors. 

This will make the economic growth target in 2022 (+7%) easily achievable. 

Controlling average inflation in 2022 within the Government target (4%) will not be too difficult.

The manufacturing industry is positive thanks to domestic demand and the driving force coming from the export of textiles, garments and footwear, instead of electronic products.

In particular, retail consumption rebounded thanks to low inflation pressure, much lower than the rest of the world. The pressure on commodity prices cooled down sharply in August when fuel prices were adjusted down sharply, with gasoline prices down 14.5% and oil down 12.9% compared to July.

According to the General Statistics Office, the total retail sales of consumer goods and services in August 2022 was estimated at VND 481 trillion, up 0.6% over the previous month and up 50.2% over the same period last year. 

In the first eight months of 2022, the total retail sales of consumer goods and services was $157 billion, up 19.3% over the same period in 2021.

Vietnam’s economic recovery is one of the most impressive in Asia and is a factor that has caused leading retailers to expand their networks. 

Vietnam’s retail market is more vibrant than ever, attracting many domestic and foreign investors such as AEON Mall, Central Group, ThaiBev, Lotte Mart, Masan Group and MWG.

Big players expand networks

In early August 2022, Mr. Tran Ba Duong – Chairman of the Board of Directors of Truong Hai Group Joint Stock Company (Thaco) – announced Thaco’s ambitious goals by 2026: Opening 20 Emart hypermarkets with annual sales of US$1 billion, taking the lead in Vietnam’s hypermarket segment.

Thus, Emart will compete directly with the giant AEON from Japan. With the franchising strategy, Emart Vietnam is oriented to be an important piece, completing the multi-industry model of “one stop, many utilities” that Thaco Group is pursuing.

In 2021, Emart Go Vap earned a revenue of VND1.6 trillion. This year, Emart will open 2 hypermarkets in Thu Thiem and Phan Huy Ich in HCM City.

After 2 years of being affected by Covid-19, retail giants have been developing strong new investment strategies, based on signals of economic recovery. Central Retail Vietnam (Thailand) plans to invest about VND20 trillion in the period 2022-2026 to become the No. 1 omni-channel platform in the field of food and shopping malls in Vietnam. Central Retail also aims to expand its network to 55 provinces in the country.

AEON aims to have 30 shopping centers across the country by 2030 and the latest move is its expansion into the segment of low-cost fast fashion brand, My Closet.

Masan has opened more than 300 WinMart supermarkets and stores so far this year. This is part of the plan to open 700 WinMart stores and more than 20 WinMart supermarkets/hypermarkets.

Masan has recently put into operation the chain of WIN convenience stores in Hanoi and Ho Chi Minh City. This is a new store chain in the WINlife ecosystem development strategy, helping consumers experience the more convenient and more modern consumption ecosystem. This new chain has necessities, financial services, Phuc Long pharmaceuticals, telecommunications services (Reddi). In 2022, Masan plans to open 80-100 WIN stores across the country.

Nova Group of Mr. Bui Thanh Nhon is also determined to open 300 Nova Market selling points in 2022 in Ho Chi Minh City, Phan Thiet, Ho Tram and 2,000 points of sale by 2025.

In the pharmaceutical retail sector, MWG’s An Khang pharmacy chain is growing strongly. By the end of July 2022, An Khang had 510 pharmacies, including 432 operaitonal unit.

Meanwhile, FPT Digital Retail Company is developing its Long Chau pharmacy chain, with 772 Chau Long drug stores.

In the segment of goods for mothers and children, Mobile World Group (MWG) is expanding the retail chain AVA Kids and so far, it has had several dozen stores. MWG’s goal is 1,000 stores or more, with revenue of VND1,000-VND1,500 billion.

Con Cung’s mother and baby store chain is dominating the market with 655 supermarkets (as of September 15). Con Cung aims to open 2,000 mom and baby supermarkets by 2025.

Many famous brands have penetrated into the Vietnamese retail market. According to a report by Vincom Retail, cosmetics company Sephora, a member of LVMH Group (Louis Vuitton) will open a retail store in Vietnam.

Many new names have appeared in shopping centers such as: Annam Gourmet, Lyn, Beauty Box… Even when Covid-19 raged, in 2021, big brands still expanded operations in Vietnam such as Uniqlo, H&M, Muji, The Body Shop, Dooki… The expansion of the total area of Vincom Retail – VRE also shows this.

The race in the Vietnamese retail market is hotter than ever. This is considered the time for large domestic and foreign corporations to break through, waiting for the wave of consumption in a market of 100 million people, a young population structure and a booming economy, where people’s incomes are increasing day by day. 

Besides, the change in the retail market towards a modern sales model to replace the traditional one also creates a special attraction.

In the opposite direction, the challenge is the decline in growth of the world economy, thereby affecting the Vietnamese economy. In addition, there is the factor of high inflation globally, especially the impact of the prolonged conflict between Russia and Ukraine. High inflation and a slowdown in growth may affect the domestic retail market, thereby affecting businesses’ expansion strategies and market share.

Tran Thuy

Source: https://vietnamnet.vn/en/vn-economy-recovers-businesses-expand-retail-network-2072887.html