Retail in Asia


Special report: Vietnam’s retail landscape at a glance

As retailers look to diversify their portfolios, Southeast Asia is coming into focus – and Vietnam, in particular, is emerging as a key player. HSBC forecasts Vietnam’s GDP will increase by 6.3 percent in 2024, driven primarily by exports and domestic consumption. 

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Vietnam has a population of over 100 million, 55 percent of whom are under 35 years old. According to a McKinsey report, Vietnam’s middle class has witnessed a steady expansion, both in terms of geographical reach and diversity. This growing middle class population has led to an increase in the number of consumers who are becoming more discerning and demanding.

Projections indicate that by 2035, more than half of the Vietnamese population will join the global middle class, contributing a boost in disposable income and a significant surge in consumption. This upward trajectory in the middle-class segment is poised to shape the future of Vietnam’s economy and consumer landscape.

Vietnam’s commercial real estate landscape

Source: Shutterstock

David Jackson, principal and CEO of commercial real estate services firm Avison Young Vietnam, which opened an office in the market earlier this year, notes Vietnam’s commercial real estate market has encountered various challenges since the middle of 2022. The introduction of new retail spaces has faced hindrances from domestic legal and capital issues, shifts in supply chains, and the rise of online deliveries. However, looking ahead, there are promising signs indicating a decrease in volatility. 

“Retail real estate in Vietnam is currently under-resourced, that is why developers and retailers all want a ‘piece of cake’. The Vietnam retail market is thriving thanks to high domestic consumption backed by a young and populous demography,” says Jackson.

“The rise of e-commerce in Vietnam will accelerate transformation within retail real estate operations. To maximise the asset’s income and efficiency, retail owners and operators need to focus more on increasing shopping experience, innovation and technology to add more value for tenants,” Jackson adds.

In response to the challenges faced over the past three years, retail developers have devised a multitude of innovative solutions to adapt and overcome.

According to Jackson, the likes of Aeon (Japan), Central Retail (Thailand), Emart and Lotte (Korea) have leveraged the slowdown by seeking suitable land funds, while other firms are restructuring and repositioning their retail models and concepts, as seen with Diamond Plaza, Bitexco Financial Tower, and most recently Hung Vuong Plaza. 

“There is [an] upcoming trend for retail real estate development, including out-of-town shopping centres or commercial centres located in transport hubs, especially when more metro lines are being developed in HCMC and Hanoi.”

New to Vietnam

Source: Tory Burch

New retail brands in the premium to luxury category continue to enter the market in 2023 – including SK-II, Beauty in the Pot hotpot, Lilliput, Diptyque, Tory Burch, Lush, and most recently, Loewe. 

Source: Diptyque

In July, Runway Vietnam, a luxury and designer fashion retail concept, unveiled a new 7,535-square-foot multi-brand store at Diamond Plaza in Ho Chi Minh City, looking to address growing demand from young and discerning customers. Runway Vietnam carries brands including Jacquemus, Self-Portrait, Theory, Ganni, Zimmermann, and Studio Nicholson, as well as a more experimental mix that includes Comme des Garçons, Junya Watanabe, and Rick Owens, among others.

In November, LVMH-owned Spanish fashion house Loewe opened its first boutique in Vietnam with local distributor Tam Son International. 

Source: Lotte Mall West Lake Hanoi

But other cities in Vietnam are also presenting attractive points of entry for brands. Hanoi, in particular, has seen a boost in retail establishments. South Korea’s Lotte Group opened West Lake Hanoi mall, Vietnam’s largest retail development, in September.

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“There are two development scenarios for brick-and-mortar retail spaces in Ho Chi Minh City. On the one hand, under the pressure of limited land funds in the CBD, new supply will shift to near-central areas such as Cu Chi, Binh Chanh, Hoc Mon and Thu Duc City,” Jackson says.

“On the other hand, large retail brands are actively seeking potential new developments in tier-2 and tier-3 cities to leverage good infrastructure, rapid urbanisation and favourable policies. Some targeted locations are Lao Cai, Lai Chau, Hai Phong, Hue, Buon Me Thuoc, Dak Lak, Binh Phuoc, Tien Giang and Long An, to name a few.”