Econ
Vietnam is among top 5 retail market development in Asia
Aiming at exchanging, discussing on the topic of development path for Malls in Vietnam, the opportunities, challenges and the future of an important retail format with updated information, analysis of experts from various aspects,the Association of Vietnam`s Retailers organized Vietnam Retail Forum 2015 in Hanoi.
According to Duong Duy Hung - Deputy Director of the Domestic Market (MOIT), in 2015, in the context of deeper integration, modern retailing is increasingly asserting its role as engine of growth of the retail industry in the home country. In particular, shopping center - one of the retail format that is very common in the world has been experiencing difficulties for initial developments.
Before Vietnam joined WTO, many comments concerned the possibility of collapse of traditional and modern retail channels was formed earlier for a short time due to the open door policy for corporations multinational retail. However, summing over 5 years of WTO membership and toward deeper integration with the ASEAN region and the world with a series of newly-signed FTA shows that the Vietnam retail businesses are not passive but is step by step to adapt to the new context, enhancing competitiveness to survive.
But now, foreign companies are strongly investing in Vietnam to make domestic businesses to face a number of challenges, if they are not actively developing modern trends and professionalis, they will easily lose the chance to master on floor.
Recognizing the limitations of the domestic business, Dinh Thi My Loan, President of the Association of Vietnam Retailers shares: Currently, the domestic retail development cannot penetrate as foreign corporations by lacking and weakening on issues like professionalism, long-term growth strategy, financial resources.
Therefore, businesses are still operating in a state of dispersion yards, inefficient, limited inventory stockpiles and made thinner, the distribution network cannot act professionally. Giving an example of the 4 leading enterprises in the distribution sector is Satra, Hapro, Saigon Co-op and Phu Thai Group that has linked together in 2007, founded Investment and Development of Distribution Vietnam (VDA) with the total capital of 6.000 billion.
But so far, VDA has no specific actions to change the market because enterprises are pursuing personal development path. Therefore, to overcome the challenges and shift from traditional procurement model into modern centers, enterprises need to study further the development experience of the retail giant multinationals, the world association, retailer association presented as Japan, Korea, Singapore, Thailand, etc.
Not only that, businesses need to reorganize, cut unnecessary services to lower prices, investing in chain stores, supermarket chains and resumption of joint ventures, affiliate to develop new retail formats such as supermarket, convenience stores, investments in rural areas so that expanding development opportunities, winning market share at home.
Another problem that the speakers mentioned many times in this forum is the value of final consumption to GDP in Vietnam up to 70%; of which, 90% is private consumption. This makes Vietnam became one of the retail market in the top 5 fastest growing in Asian region and the world.
Moreover, many other forecasts that by 2020, the middle class of Vietnam will increase 3 times and will be the best group of potential customers for the business center, the retailer. Perhaps this explains the Vietnamese consumers to increasingly prefer to shop in the model order online and receive them in the house because of the convenience and connectivity through the digital world. Retailers can meet these requirements will have market advantages.
This report also shows that the rental market of retail space in Hanoi and Ho Chi Minh City now negatively correlated. If retail space in Hanoi who had the highest vacancy rate in the past 5 years (sometimes up to 20%), the Ho Chi Minh City has a relatively low rate, just under 10%. This also affects retail rents average in two areas. Accordingly, rents in Hanoi in reduced group of Asia-Pacific, while Ho Chi Minh City at the group increased the most in the region. The rent of the central area of Ho Chi Minh City and Hanoi is very high, amounting to over 120USD/m2 per month in the third quarter of 2015. However, in the world, shopping channels are fragmented as consumers switch to the type of smaller-scale stores.
Similarly, in Vietnam, there is 22% of Vietnamese people prefering to use the shopping channel that is the convenience store instead of entering big shopping malls.
Before Vietnam joined WTO, many comments concerned the possibility of collapse of traditional and modern retail channels was formed earlier for a short time due to the open door policy for corporations multinational retail. However, summing over 5 years of WTO membership and toward deeper integration with the ASEAN region and the world with a series of newly-signed FTA shows that the Vietnam retail businesses are not passive but is step by step to adapt to the new context, enhancing competitiveness to survive.
But now, foreign companies are strongly investing in Vietnam to make domestic businesses to face a number of challenges, if they are not actively developing modern trends and professionalis, they will easily lose the chance to master on floor.
Recognizing the limitations of the domestic business, Dinh Thi My Loan, President of the Association of Vietnam Retailers shares: Currently, the domestic retail development cannot penetrate as foreign corporations by lacking and weakening on issues like professionalism, long-term growth strategy, financial resources.
Therefore, businesses are still operating in a state of dispersion yards, inefficient, limited inventory stockpiles and made thinner, the distribution network cannot act professionally. Giving an example of the 4 leading enterprises in the distribution sector is Satra, Hapro, Saigon Co-op and Phu Thai Group that has linked together in 2007, founded Investment and Development of Distribution Vietnam (VDA) with the total capital of 6.000 billion.
But so far, VDA has no specific actions to change the market because enterprises are pursuing personal development path. Therefore, to overcome the challenges and shift from traditional procurement model into modern centers, enterprises need to study further the development experience of the retail giant multinationals, the world association, retailer association presented as Japan, Korea, Singapore, Thailand, etc.
Not only that, businesses need to reorganize, cut unnecessary services to lower prices, investing in chain stores, supermarket chains and resumption of joint ventures, affiliate to develop new retail formats such as supermarket, convenience stores, investments in rural areas so that expanding development opportunities, winning market share at home.
Another problem that the speakers mentioned many times in this forum is the value of final consumption to GDP in Vietnam up to 70%; of which, 90% is private consumption. This makes Vietnam became one of the retail market in the top 5 fastest growing in Asian region and the world.
Moreover, many other forecasts that by 2020, the middle class of Vietnam will increase 3 times and will be the best group of potential customers for the business center, the retailer. Perhaps this explains the Vietnamese consumers to increasingly prefer to shop in the model order online and receive them in the house because of the convenience and connectivity through the digital world. Retailers can meet these requirements will have market advantages.
This report also shows that the rental market of retail space in Hanoi and Ho Chi Minh City now negatively correlated. If retail space in Hanoi who had the highest vacancy rate in the past 5 years (sometimes up to 20%), the Ho Chi Minh City has a relatively low rate, just under 10%. This also affects retail rents average in two areas. Accordingly, rents in Hanoi in reduced group of Asia-Pacific, while Ho Chi Minh City at the group increased the most in the region. The rent of the central area of Ho Chi Minh City and Hanoi is very high, amounting to over 120USD/m2 per month in the third quarter of 2015. However, in the world, shopping channels are fragmented as consumers switch to the type of smaller-scale stores.
Similarly, in Vietnam, there is 22% of Vietnamese people prefering to use the shopping channel that is the convenience store instead of entering big shopping malls.
