Growing modern retailing puts greater pressure on domestic firms

Hanoi (VNA) – Modern retail channels will account for 40 percent of the total retail sales by 2020, compared to only 25 percent at present, pushing domestic retailers into a fierce battle with foreign firms who are eyeing a bigger share of the fast-growing Vietnamese market.

The view was shared by participants at an online discussion held by the Vietnam Government Portal (VGP) on June 20 with head of the Ministry of Industry and Trade’s Domestic Market Department Vu Van Quyen, President of the Vietnam Retailers Association (VRA) Dinh Thi My Loan and Director-General of Saigon Co-op, Vietnam’s largest retailer, Nguyen Thanh Nhan in attendance.

Vietnam is now home to about 800 supermarkets, 168 shopping malls, 8,660 traditional markets and more than 1 million small household shops.

Quyen said traditional retail outlets still dominate the market, presenting a great challenge for the growth of modern formats.

However, the VRA President noted the country’s open-door economic policy is creating plenty of opportunities for modern retailing, with the entry of many foreign retailers during recent years.

The Director-General of Saigon Co-op said he believes that the increasing presence of foreign players in the market will motivate domestic firms to change for the better, particularly in terms of capability and competitiveness.

State management officials agreed with experts and business representatives that domestic retailers are suffering from a wide range of issues, particularly limited financial resources and a lack of capable personnel.

They are also restrained by the 15 percent cap on advertising expenses of the total legitimate costs while their overseas rivals are not affected by this rule.

VRA President Dinh Thi My Loan said that improving competitiveness for local retailers has been top priority of the association which has been engaged in policy-making process for the retail industry and provided human resources and management training courses for its company members.

It has also acted as a bridge between the members, producers and consumer protection organisations, she noted.

It is vital for domestic firms to shift from traditional shopping channels to modern ones, she added, suggesting that they should invest in convenience stores, supermarkets or cooperatives and encourage the distribution of high-quality made-in-Vietnam products.

Quyen revealed that the Ministry of Industry and Trade has undertaken measures to help domestic retailers build their own brand names and enhance competitiveness. But whether they can maintain and protect their brand depends on their own efforts, he said.-VNA