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Jan 08, 2024 / 21:58

Fierce competition as retail giants expand in Vietnam's market

Retailers compete primarily on price, product quality, brand reputation, consumer confidence, multichannel distribution technology capabilities, and speed and delivery.

Competition in the hypermarket and shopping mall segments between foreign and domestic retailers has intensified, and the rivalry between traditional and modern retail channels has been attributed to their extensive market penetration, according to economist Vu Vinh Phu, as reported by VnEconomy.

In recent years, domestic and foreign retailers have actively engaged in numerous shopping center development projects in Vietnam, with a forecast of increased investment in the market soon, Phu stated.

Beyond operating department store chains, retailers in Vietnam are actively involved in purchasing goods, particularly agricultural and food products, for export to supply retail outlets in other countries.

Truong Hai Group Corporation (THACO) has launched the Emart supermarket in Ho Chi Minh City's Go Vap district, spanning 10,500 square meters. Another THACO subsidiary, Dai Quang Minh Corporation, received approval for the construction of a commercial and shopping center on a 2.4-hectare plot of land in Hanoi's Tay Ho District. This development will bring the total number of THACO's Emart outlets to 10 by 2025.

 Local consumers shop at the Emart supermarket. Photo: Emart

Vincom Retail, Vietnam's largest shopping mall operator, owns five department stores covering more than 10,000 square meters. These malls are often located in urban areas and residential complexes with large populations and cater to middle-class shoppers. They also run seven shopping centers in the center segment in densely populated areas. Vincom Retail also operates stores in several smaller segments.

South Korea’s Lotte Group opened a 350,000-square-meter shopping center, hotel and apartment complex in Hanoi's West Lake in the third quarter of 2023. They currently operate 19 other malls in Vietnam.

Japan's  AEON Mall operates six supermarkets nationwide and plans to increase its total number of department stores to 20 in the coming years.

Thailand's Central Retail runs 340 retail outlets in more than 40 provinces and cities nationwide, including 38 GO! hypermarkets, 39 retail supermarkets and 200 non-food retail outlets.

Phu noted that competition is mainly based on pricing, product quality, brand reputation, consumer trust, multi-channel sales technology capabilities, speed and delivery time.

"The result of this competition is fair benefits for suppliers, manufacturers and consumers," he stressed.

He added that in 2023, the Vietnamese retail market witnessed a boom of trade fairs as domestic manufacturing and business enterprises sought to expand their market share. Trade promotion exhibitions showcasing regional products and One Commune, One Product (OCOP) items have invigorated the Vietnamese retail market.

 Lotte Mart in Cau Giay District. Photo: Pham Hung/The Hanoi Times

According to the General Statistics Office, Vietnam's total retail sales reached VND4.85 trillion (US$199.7 billion), up 8.6% year-on-year.

Vu Dang Vinh, CEO of Vietnam Report, told Economic & Urban Newspaper that the impetus from supportive government policies is one of the key foundations that helped retailers overcome difficult times and improve their profitability in the final months of 2023.

He mentioned that the Vietnamese retail market is considered attractive, with significant development potential in the medium and long term. The market is currently valued at $142 billion and is expected to grow to $350 billion in the coming years.

Factors such as a developing economy, a large population with a preference for connectivity, urbanization, rising average incomes, and a higher standard of living are conducive to the growth of the Vietnamese retail market, Vinh said.