An Uniqlo store in Hanoi (Photo: kenhz.net) The store spreads over an area of more than 3,000sq.m.
This is Uniqlo’s 11th outlet in Vietnam since opening its first in HCM City in 2019.
Notably, all have an area of 300sq.m or more, which would normally qualify them as flagship stores.
Some of the best known flagship stores are tourist attractions in their own right.
Uniqlo is not Japan’s only retailer to open flagship stores in Vietnam.
In 2020 MUJI, the renowned Japanese home-and lifestyle-goods company, opened its first outlet in the country at the Parkson Saigon tourist Plaza Shopping Centre in HCM City’s downtown.
With an area of more than 2,000sq.m, it was MUJI’s largest store in Southeast Asia.
It has features such as a coffee counter serving a selection of teas, coffees, pastries, and Japanese confectionery.
Several Vietnamese players have also taken to opening flagship stores.
In December last year, Nguyen Cong Tri Corporation opened one at the Continental Hotel in HCM City’s District 1.
Earlier this year the Con Cung apparel retail company opened its flagship store on an area of more than 2,000sq.m in the Phu Dong Roundabout in District 1.
Market observers said these large stores are now opening not only in big cities like Hanoi and HCM City but also in other smaller ones around the country.
Uniqlo for instance recently opened one at the Le Chan Aeon Mall in Hai Phong, the northern port city.
Analysts said the trend of opening large stores is likely to become stronger this year as demand recovers in Vietnam and becomes steady.
Giant e-commerce firm Lazada is expected to soon open a flagship store specialising in technology goods in HCM City.
Revenues from retail trade and services exceeded 1.77 quadrillion VND (76.2 billion USD) in the first four months of 2022, up 6.5% year-on-year, a report from the Ministry of Industry and Trade (MoIT) shows.
In April they grew by 12% year-on-year to over VNĐ455 trillion, according to the report.
Both foreign and domestic retail giants are vying with each other to open large stores at prime locations in big cities to grasp the new opportunities arising from the changes in the market caused by the COVID-19 pandemic.
What are the opportunities?
After the country, especially HCM City, was hit by the pandemic necessitating long quarantine periods, many retail companies were forced to pull out of the market, leaving retail spaces at prime locations vacant.
Some big companies found this to be a good time to find large spaces at good locations and with reasonable rents to set up a chain of large stores.
Analysts say there is no one route to becoming a flagship store. It could be the brand’s first store, it could be the largest store in the chain, or it could be in a prominent or prestigious shopping location that attracts a lot of footfall. It might have the widest product range and/or exclusive items, unique design or decor, or just generally be the best known of the chain’s stores.
A flagship store may combine some or all of these traits. Many brands have more than one flagship store, whether that is one in each territory, or even more than one in the same city covering different prime locations or with their own unique design.
They said however that there would also be some challenges for a firm setting up and maintaining a flagship store.
Tran Pham Phuong Quyen of property consultant Savills said flagship stores often required a large outlay for renting space, store decoration, operation, and inventories.
New foreign investment strategy
Vietnam expects foreign investments to contribute more to its socio-economic development to match the incentives the government offers them.
To achieve this, Deputy Prime Minister Pham Binh Minh recently issued Decision No 667/QD-TTg containing a foreign investment strategy.
One of its targets is to attract foreign investment into projects that use high technology and have high added value, positive ripple effects and links with global production and supply chains.
It envisages investments from certain countries and territories increasing to make up over 70% of total FDI in 2021-25 and 75% in 2026-30.
They include the Republic of Korea, Japan, Singapore, mainland China, Taiwan, Malaysia, Thailand, India, Indonesia, and the Philippines in Asia and France, Russia, Germany, Italy, Spain, and the UK in Europe.
The number of companies in the Fortune 500 list operating in the country is expected to increase by 50% in the period between 2021 and 2030.
By 2030 the country expects to be among the top three countries in Southeast Asia and top 60 in the world in the World Bank’s “ease of doing business” rankings.
To achieve such ambitious targets and enhance the effectiveness of foreign investments, the strategy contains several solutions including concerted efforts to improve the country’s investment and business environment, strengthen the competitiveness of its economy, and foster science and technology and innovation.
Besides, supporting industries will be developed, and several measures will be adopted to improve competitiveness in attracting foreign investment and effectiveness of the foreign investment and increase links between the foreign-invested and other sectors of the economy./.
VNA
