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Trade - Service
Nov 15, 2017 / 17:21

Vietnam among top attractive retail markets

Ngoc Thuy

According to the Research Institute, in period 2016 – 2020, the growth rate of Vietnam’s retail market will be 22.9% per year, with the market scale to be 179 billion USD by 2020. As such, Vietnam is considered as one of the 30 most attractive retail markets of the world.

However, the retail segment, especially the the majority of modern distribution channels, such as super markets, convenient store, shopping malls, are under the ownership of foreign companies with 53% revenue. 
 
Vietnam is considered as one of the 30 most attractive retail markets of the world.
Vietnam is considered as one of the 30 most attractive retail markets of the world.
According to a report conducted by market research Euromonitor (UK), by 2020, foreign retailers will hold 68.3% of total retail market share in Vietnam. With this being said, many domestic retailers are losing their competitive edge, while super markets owned by Vietnamese enterprises are fighting a losing battle against super markets financed by foreign companies, such as AEON, E-mart, Lotte Mart, Mega Market. 

For example, Saigon Co.op, a leading retailer in Vietnam has shifted focus from expanding new super markets to convenient stores in the last two years. Currently, domestic retailers are Saigon Co.op with series of Co.opmart super markets and stores such as Co.op Food, Co.op Smile, Co.op Xtra and shopping mall Sense City. VinGroup has super market Vinmart and stores such as Vinmart+, VinPro. Satra has SatraFood, 1 super market Satramart and 1 shopping mall. The Gioi Di Dong has the Bach Hoa Xanh stores; Dong Hung has series of super markets and stores Citimart. 
 
AEON has acquired 40% stakes of Citimart.
AEON has acquired 40% stakes of Citimart.
With regard to the competitiveness of domestic retailers, it is clearly to see that the strength of Vingroup is not from retail sector but real estate. Similarly, for Satra, retail sector is not the focus of this company, as the brand Satrafood is faltering in the market. Bach Hoa Xanh of The Gioi Di Dong has been through IPO and sold to foreign investors; Meanwhile, AEON has acquired 40% stakes of Citimart. As such, only Saigon Co.op is fully owned by domestic companies. However, in the future, if Saigon Co.op considers to sell its stake, then the retail segment in Vietnam will be divided by Foreign Direct Investment (FDI) companies. 

In the context of more foreign companies are expressing interest in Vietnam’s retail market, evidenced by an increased number of super markets and shopping malls through mergers & acquisitions (M&A) deals, domestics companies are taking small steps in developing convenient stores. Even Saigon Co.op is showing sign of slowing down, and even experienced setback in opening new super markets in the last 2 years. 

The Vietnam’s retail market has high potential for development, for which not only foreign retailers are showing interest, but now global fashion brands also join the market, such as Zara or H&M. In addition to Thailand, enterprises from Japan and Korea are gradually taking their shares in Vietnam’s retail market. Moreover, more FDI enterprises are putting their foothold in retail sector, especially in the segment for middle to high incomers. 

In this context, if domestic retailers do not have new strategies and measures, it is feasible that Saigon Co.op, the leader in Vietnam’s retail market will soon lose its top spot to foreign companies. 

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