In Markets

Vietnam’s retail sales leap to US$118 billion

vietnam-by-night

The General Statistics Office has estimated Vietnam’s 2016 retail revenue at US$118 billion, a 10.2% rise over the previous year.

This revenue growth rate was relatively high compared to other markets in the region. Notably, food and foodstuff sales increased by 13%, followed by household appliances with 11.4% and textiles and garments with 10.6%. Sales of educational and cultural products barely grew in 2016, at 1.7% year-on-year.

Last year continued to see the retail network expand, business models diversified, and mergers and acquisitions of retailers increased, especially with foreign involvement.

For example, Thailand’s Central Group acquired Big C supermarket chain from French retail group Casino in Vietnam. It announced its long-term investment and business plans with an aim to double the number of Big C stores from the current 34 in the next five years. In addition, it will upgrade existing Big C stores into commercial complexes.

SEE ALSO: Big C Thailand to open 84 new stores

Upon purchase of wholesale firm Metro Cash & Carry Vietnam, Thailand’s TCC Holding renamed Metro in Vietnam as MM Mega Market and established a wholesale store chain under the new brand in Thailand.

Other international retail groups such as Japan’s Aeon, France’s Auchan and South Korea’s Lotte were accelerating their expansion to increase market share.

The convenience store model developed fast in the country, which is for the most part in the hands of foreign players such as Circle K, Shop & Go, Family Mart and Ministop, with hundreds of stores for each brand.

According to analysts, foreign retailers had better advantages in terms of experience and finance. Foreign retailers outdid domestic rivals by introducing new shopping experiences, along with effective services and media, to attract consumers. Therefore, the competition got fiercer, pushing local firms into a difficult position.

For domestic retailers, the market also saw the business network development and retail model diversification, as seen at the chains of Saigon Co-op, Vingroup and Satra, but a number of familiar players such as such as Maximark, Citimart, and FiviMart had to pull out of the market due to mounting competition triggered by foreign retailers.

SEE ALSO: Vietnam retail market attracts foreign investors

As reported by the HCMC Union of Business Association, Vietnamese goods used to account for 80-90% of total volume at most retail channels. However, a survey conducted last year showed foreign commodities assumed the dominant position in some foreign-invested retail systems. Vietnamese producers of quality goods could find it easier to enter local supermarkets, but not foreign-invested ones.

Basically, the Vietnamese retail market still holds great potential, as modern shopping in Vietnam just makes up 25% of total retail sales, and a majority of supermarkets and commercial centers are often located in major cities. Therefore, the modern retail market in Vietnam has much room left for development.

As predicted until 2020, the proportion of modern retail channels will rise by 45%. The country will have 1,200-1,300 supermarkets and more than 300 large malls, and thousands or even tens of thousands of convenience stores.

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