Retail sector holds opportunities

Vietnam is a promising market for foreign retailers and will have more competition on the local retail market next year which is the deadline of opening the domestic retail market.
Vietnam is a promising market for foreign retailers and will have morecompetition on the local retail market next year which is the deadlineof opening the domestic retail market.

According tothe Association of Vietnam Retailers (AVR), the country has 130 tradingcentres, 700 supermarkets and over 1,000 convenient shops developed bylocal and foreign firms, including 21 wholly-foreign invested firms,reports Dien dan Doanh nghiep newspaper.

The numberof local retailers is not small but, in reality, there are only a fewlarge and successful local retailers. Meanwhile, the domestic retailmarket has great potential for retailers.

The GeneralStatistics Office reports that Vietnam's retail market isrecovering, with the opening of many trading centres, supermarkets andshopping malls. Further, the market has attracted many largemulti-national groups.

Retail experts note that it istypical to find one trading centre and one shopping mall per 100,000people, while one supermarket often serves an average of 10,000 peopleand 1 to 2 convenience shops serves up to 1,000 people. But in the majorcities of Hanoi and Ho Chi Minh City the demand is not ensuredand there are areas with vacant retail sites.

Additionally,convenience shops, supermarkets, trading centres and shopping mallshave accounted for 22 percent of the domestic retail system. Thispercentage, however, is higher in neighbouring countries, including 30percent in the Philippines, 43 percent in Indonesia, 46 percent inThailand, 51 percent in China, 60 percent in Malaysia and 90percent in Singapore .

Vietnam, then, has become a potential retail market for foreign retail firms, the experts said.

TheCB Richard Ellis Vietnam branch said in its quarterly report onproperty in Hanoi , that in the first quarter this year Vietnam wasnegotiating to participate in the Trans-Pacific Partnership to createfair competition among domestic and foreign retailers.

Inaddition, Vietnam is expected to see an influx of retailers fromThailand , Japan and the Republic of Korea (RoK). Largedevelopers, such as Aeon Mall, Central Group, and CJ Group, haveexpressed interest in gradually expanding their presence and announcinglong-term plans in the market.

Among other positivesignals at the beginning of the year was that consumer confidence wasthe highest in the last two years, as of the end of 2013, according tothe Nielsen market research firm. Experts note that higher confidencemeans consumers would be spending more money, leading to higher demandfor retail businesses.

Further, Vietnam Report, aHanoi survey company, reports that retail ranks 6th among top 10highest ROA (return on asset) industries in Vietnam , which indicatesthere will be further developments in the future.

Vietnam has attracted many foreign retailers, including Lotte from theRoK, Aeon from Japan , Berli Jucket from Thailand and Auchan fromFrance .

Lotte plans to develop 60 supermarkets andtrading centres in Vietnam , while Aeon expects to have 20 tradingcomplexes in the nation by 2020.

Meanwhile, existing foreign retailers, such as Metro and Big C, have also expanded their businesses in Vietnam.

Also,large domestic retailers, including Hapro, OceanMart, Eximart, Satraand Sai Gon Co.op, have expanded their system to compete withdevelopment of foreign retailers in the home market.

AVRchairwoman Dinh Thi My Loan said Vietnamese supermarket and retail shopchains had been upgraded, but they still lacked professional factors,competitiveness in pricing, diversification in products and control inquality of products.

Of note, many local retailerssaid they had difficulties due to state management policies. Foreignretailers had many investment incentives when developing their retailsystem in Vietnam , they said. For example, foreign retailers easilyfound sites to develop their retail infrastructure, while domestic firmsmust face challenges in purchasing sites for developing businesses.

Loanexpected the state would solve such problems by creating favourableconditions for domestic retailers when competing with foreign rivals.

Fordomestic retailers, she said, they must improve their distributionpolicies, including building modern distribution systems in urban andrural areas and cooperating with management offices in controlling thequality of products within their retail systems.-VNA

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