The Hanoitimes - Despite the fierce competition, the number of convenience stores in Vietnam has nearly quadrupled since 2012, according to a report from Nielsen Vietnam.
The global measurement and data analytic company reported that the number of health/beauty and modern drug stores also doubled in the past 2 years. More noticeably, mini-mart was the number 1 channel in store openings in 2016 and 2017.
“Thanks to rapid growth in store expansion, modern trade has significant higher growth rate against traditional trade and we do expect to see more growth from this channel in 2018,” Nguyen Anh Dung, Executive Director, Retail Measurement Services, Nielsen Vietnam, said.
VinMart has 1,000 stores after three years entering the market
“According to our observation, modern retailers will continue to expand and to invest in their stores to attract more shoppers. So, the future of these small-format modern stores looks very optimistic and the growth of this channel will continue and even accelerate in the future,” Dung added.
Data released last month by international grocery research organization IGD also showed that Vietnam is forecast to be the fastest-growing convenience market in Asia by 2021, followed by the Philippines and Indonesia.
In the convenience channel, IGD has forecast high double-digit compound annual growth over the next four years in Vietnam (37.4 percent), the Philippines (24.2 percent) and Indonesia (15.8 percent).
Nick Miles, head of Asia-Pacific at IGD, said: “The retail markets in these three countries are gradually shifting from traditional to modern trade and there are several factors driving this -- positive economic outlook, significant increase in GDP per capita, deregulated markets encouraging more foreign investment and rapidly changing shopper habits.”
Referring to the particularly strong growth tipped for Vietnam, Miles said: “Convenience stores in Vietnam have become popular destinations for young consumers to shop and hang out, as the stores provide them with an air-conditioned environment, well-organized shelves and seating areas, high quality products, and, in some stores, free Wi-Fi. It is also easier to get licenses for stores under 500 square meters, which is why retailers have been expanding to gain market share.”
Vietnam, the Philippines and Indonesia, according to IGD, share some characteristics that make their convenience markets ripe for growth. These three markets are predominantly driven by an increase in store numbers.
Asia’s convenience market has traditionally been dominated by Japanese retailers. However, there have been more market consolidations and partnerships, and most noticeably, domestic players such as VinMart in Vietnam have been scaling up their operations. VinMart proved to have the fastest growth rate in convenience stores expansion in Vietnam with a total of 1,000 stores after three years entering the market.
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. There are currently some 1,765 convenience stores in Vietnam. It means there is approximately one convenience store per 54,400 Vietnamese citizens, compared with 24,900 persons in China, 2,300 persons in Japan and 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 have 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.
Seeing high potentials of the market, many foreign retailers have flocked to Vietnam in the past few years. It was estimated that foreign investors opened more than 100 new convenience stores in Vietnam last year alone.