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Two years ago, Vietnam ranked 28th on the index, which analyzes 25 macroeconomic variables to help retailers devise successful global strategies to identify potential retail investment opportunities. With increasing disposable incomes, rapid urbanization and rising living standards, Vietnam is one of the most dynamic emerging economies in Southeast Asia.
Vietnam’s retail market has witnessed healthy growth rates of approximately 10 percent annually in recent years, with sales growing by about 90 percent from 2009 to 2015. The market is forecast to reach $109 billion in 2017, according to the Economist Intelligence Unit.
Retailers, in particular, have seen the country’s relatively young population as the main driver of robust retail market growth.
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Official statistics show Vietnam has roughly 600,000 retail outlets nationwide, and it is estimated that figure will jump by 45 percent in the next four years. Photo by Vietnam News Agency. |
Global management consulting firm A.T. Kearny said Vietnam’s gross domestic product has grown 5.2 percent annually since 2013, the highest among its Southeast Asian peers ranked in the GRDI.
Convenience stores are a phenomenon in Vietnam, with estimated growth in store numbers of more than 260 percent since 2012, the consulting firm estimated.
Companies seeking to tap into these trends include domestic giant Vingroup, which opened 93 stores last year and plans to open twice as many in 2016; Japan’s Family Mart, which will open more than 100 stores in 2016, and 7-Eleven, which is entering the market through a franchise agreement with Seven System Vietnam.
Some global heavyweights have also entered the scene.
Apple opened a Vietnam subsidiary that allows it to import and distribute cell phones directly to a market that now has more than 150 million mobile phone subscribers with an increasing desire for smart phones.
South Korean hypermarket operator E-mart has launched its first Vietnamese store in Ho Chi Minh City and announced further plans to expand its network to 52 stores before 2020.
Japan’s AEON introduced Topvalu to Vietnam in late 2015, tapping into the popularity of Japanese culture to offer authentic Japanese ingredients and home cooking kits.
Such prospects have spurred significant acquisition activities, particularly by local and regional players.
Conglomerate Vingroup purchased Maximark, a local retailer, rebranding it under the VinMart+ brandname. Thailand’s TCC and Central Group have acquired Germany's Metro’s Cash and Carry and France's Big C grocery chain, respectively, earlier this year.
As Vietnam has concluded a variety of free trade agreements, including the pending Trans-Pacific Partnership (TPP), the country is expected to experience an influx of foreign retailers such as Japan’s AEON, South Korea’s CJ Group and Thailand’s Central Group, which have expressed great interest and gradually expanded their presence with long-term plans for the market.
Local retailers are faced with increasingly fierce competition from foreign rivals, said Dinh Thi My Loan, chairwoman of the Vietnam Association of Retailers.
Therefore, the government should beef up its support for local retailers, laying out a roadmap so the domestic retail sector is not dominated by international companies, said Nguyen Thi Thu Trang, head of the World Trade Organization Center under the Vietnam Chamber of Commerce and Industry.
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