The noticeable growth of retail sales has attracted investors to the sector. In ten months, total retail sales of consumer goods and services made up an increase of 9.6% from the same period last year (if the price factor were excluded, the growth rate would be 8.4%), with total estimated value of 2661.6 trillion dongs,
By kinds of economic activity, retail sales of goods in ten months reached 2026.2 trillion dongs, accounted for 76.1% of the total and rose 10.7% against the last year’s similar period; accommodation and catering services gained 307.6 trillion dongs, took 11.6% of the total and rose 5% against the same period last year; travelling achieved 25.3 trillion dongs, represented 0.9% and went up by 3%; other services attained 302.5 trillion dongs, accounted for 11.4% and rose 8% over last year’s similar period respectively.
Number of supermakets by regions of Vietnam
Source: Vietnam GSOModern retail channel accounted only for a quarter of the national retail value. There are about 762 supermarkets, 132 shopping centres and hundreds of convenience stores in the country.
While most of these supermarkets and shopping centres are concentrated in large cities, sale agents are mainly located in rural areas. Rural areas are also promising or Vietnamese retailers when they face intense competition from foreign businesses in the big cities.
Potential of Vietnam's domestic retail market is being actively promoted by big companies looking to expand their businesses at a faster pace. The Vingroup-one of biggest companies in Vietnam is taking the lead in expanding shares in the home market with 125 stores and 12 shopping centres as of October. The group intends to put 40 malls into operation in 2016 and 100 in 2020. Other healthy domestic retailers including Co.op Mart and Fivimart are trying to expand their distribution channel to gain from new shopping trends in Vietnam.
However, with small size and low competitiveness, most of the rest of Vietnamese retailer businesses are facing high risks from the penetration of foreign retailer groups. Vietnam’s retail market has never been more attractive to foreign retailers and foreign retail developers, thanks to itsnumerous and young population, rising income and improved bussiness environment.
Since the market open under WTO’s commitment, the retail sector has witnessed waves of international capital ever since with big names such as Metro Cash&Carry, Big C and Lotte. Aeon group, a Japanese retailer also opened a 120,000-square-metre mall in Long Bien after the successful operation of similar supermarkets in Ho Chi Minh City and southern Binh Duong province. The company aimed to build about 20 malls in Vietnam, investing approximately 1 billion USD in the country.
Recently, French retailer Auchan is schedule to sign a lease on the MIPEC Long Bien Shopping Mall on November 3, paving the way for the conglomerate to gain a foothold in the Hanoi market. Auchan’s Simply Mart, covering 3,700 square metres, will become operational in 2016, supplying up to 4,500 household articles. It will open in conjunction with the MIPEC Riverside project, where the mall is located.
As Vietnamese consumers are more and more knowledgeable and experienced when shopping, if domestic retailer businessdo not provide better quality services, they risk loosing market share to their foreign rivals. In general, they need good plans to mobilize funds to expand distribution networks and open new outlets with diverse and convenient products. They should join hands and set up Vietnamese brands to compete with foreign competitors.
