With huge financial advantages, the more experienced world renowned retailers such as Metro Cash& Carry, Bourbon (Big C) and Parkson have opened stores in Vietnam gaining the confidence of consumers and are beginning to dominate the market, edging out the local competition.
Meanwhile, other European giants like Walmart and Carrefour are standing in line, eying the lucrative potential in the Vietnamese marketplace.
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| Supermarket products are now popular with Vietnamese consumers |
Over the past five years, trade centres, supermarkets, and convenience stores have mushroomed in Vietnam. The number of convenience stores now makes up 20% of the retail market and the figure is expected to increase twofold in 2014.
However, Vietnam’s retail market is beginning to reveal its weaknesses, especially the lack of supply chain linkages among retailers and definite lack of oversight in managing the growth of the industry, leading to spontaneous development and unhealthy competition.
Only a few Vietnamese retailers such as Co-op mart and Vinatext mart have fully developed market strategies with well thought out and highly integrated supply chains capitalising on local producers and suppliers to ensure sufficient supplies for consumers.
An appalling lack of professionalism in the retail culture is bottlenecking the fledgling retail industry from developing to its fullest potential.
With these drawbacks, many people are sceptical about the future prospect of Vietnam’s retail industry. Undoubtedly the industry has plenty of opportunity to develop given its potential and support from the State, but it needs a new thinking from market managers and stakeholders.
Experts advise Vietnam not to develop the number of convenient stores too fast, explaining Vietnamese consumers are familiar with shopping at traditional markets rather than supermarkets and it is difficult to change this age-old habit overnight.
They suggest Vietnam heavily invest in training to generate a contingent of qualified retail staff meeting international standard.
Vietnamese businesses will lose out to foreign rivals on the home turf if they do not team up to address their weaknesses, especially when foreign retailers are permitted to establish wholly foreign invested businesses in Vietnam as of January 2015.