Nov 10, 2018 / 09:52

World major brands flock to Vietnam retail market

The liberalization of the retail market has made Vietnam more attractive in the eyes of investors.

The presence of global leading companies in Vietnam, including Aeon Mall, Auchan, Lotteria, Starbucks, among others, shows the huge potential and attraction of the country’s retail market, the government portal reported.
Illustrative photo.
Illustrative photo.
Multinational companies expand operation

Starbucks opened its first shop in Ho Chi Minh city in 2013. Now, five years later, the coffee house chain is operating 34 shops.

Lotte Mart, the retail division of South Korean conglomerate Lotte Group, also planned to open 60 stores in Vietnam by 2020, while South Korean leading retailer GS Retail is expected to open 2,500 convenience stores in Vietnam in the next 10 years through its joint-venture GS25 Vietnam. 

Japan’s Family Mart currently has 130 stores in Vietnam and expected to open 700 more by 2020. Similarly, the US food retailer 7-Eleven made its presence in Vietnam in June 2017 and planned to open 100 stores by 2020 and 1,000 in the next ten years. 

Recently, e-commerce giant Amazon also entered the Vietnamese market by providing e-commerce services for local small and medium enterprises. 

Nguyen Huy Hoang, commercial director at Kantar Worldpanel Vietnam, said that foreign retail companies focus on the segment of convenience stores and mini-supermarkets, which are mainly located in urban areas. 

Local retailers still dominate Vietnam’s market, said Hoang. 

Local retail companies such as Saigon Co.op are now expanding its three major supermarket chains, including Co.opXtra, Co.op Mart and Co.op Food. The chain is on track to receive 1 million customers. 

As of present, Saigon Co.op has 100 supermarkets, 2 megal malls and 233 convenience stores in Co.op Food across the country. 

VinCommerce, a subsidiary of Vietnam's largest privately-run conglomerate Vingroup, has completed the acquisition of the supermarket chain Fivimart from Nhat Nam Trade Company. The deal is in line with VinCommerce's target of having 200 VinMart supermarkets and 4,000 VinMart+ convenience stores by 2020. After acquiring Fivimart, VinCommerce owns a network of 100 Vinmarts and 1,400 VinMart+ nationwide.

Huge potential for development

The liberalization of the retail market has made Vietnam more attractive in the eyes of investors, according to the Economist Intelligence Unit (EIU). Just like India, the growth rate of Vietnam’s market is expected to exceed that of others, particularly e-commerce. 

At present, there is approximately one convenience store per 69,000 Vietnamese citizens,  compared to one per 21,000 in China and one per 1,800 in South Korea as at the end of 2016.

There remains room for the market to growth and a rapid change in market behavior of the Vietnamese customers could make the modern retail model a promising land. 

In the FAST500 ranking recently released, the Vietnamese market witnessed a strong rise of the retail sector, reaching an annual growth rate of 63.7% in the 2013 – 2016 period. In 2017, the sale revenue from the retail sector in Vietnam stood at US$129 billion, up 11% year-on-year. 

Vaughan Ryan, CEO of Nielsen Vietnam, said that the country has a total of 600,000 retail points of sale, in which the modern retail channel is 1,200 points, accounting for 25% of the market share. The rate is projected to increase to 45% by 2020, Ryan added. 

Under this context, Vietnam’s retail market remains open for both local and foreign companies, said Ryan.