Retail sales up 28 percent year-over-year

As Vietnam moves strongly into an era of shopping malls, ‘modern’ retailers are vigorously pursuing bigger shares of a $76 billion market.

People took notice when Citimart bought the Parkson chain’s four Family Mart outlets. It’s the first time a Vietnamese retailer bought a franchise from a foreign retailer.

The four Family Marts have already been rebadged as Citimarts #27 through 30.

Impressive growth

The Ministry of Industry and Trade reports that the total revenue from retail goods and services in the first five months of 2010 reached 620 trillion dong, up twenty-seven percent over the previous year. MoIT predicts this momentum will carry through to 20 percent full year over year growth, a total of 1.44 trillion dong ($76 billion).

The buoyant retail market has kept demand for retail premises strong, even though the real estate market remains quiet overall. CBRE Vietnam reports that average rents in the central area of HCM City have reached $100 per square metre per month.

At the Vietnam Retailers’ Association, Dinh Thi My Loan says Vietnam will count 850 shopping centres and supermarkets and a few thousand convenience stores by the end of 2010.

According to Nguyen Anh Ngoc at the HCM City Trade and Investment Promotion Centre, the southern metropolis is the magnet for many big investment projects by big retail groups.

So far, fifteen global retail brands have invested in Vietnam or are actively investigating an investment, including Wal-Mart (US), Carrefour (France), Tesco (UK), Circle K (Japan), and Metro Cash & Carry (Germany). In the next three years, HCM City expects to add another 740,000 more square metres of retail premises.

Retailers trying to expand network

According to Nguyen Anh Hoa, it was Family Mart’s customers, not its brand name, that attracted Citimart. The customers of the Malaysia-based Parkson chain tend to have high incomes, exactly what Citimart wants.

Nguyen Anh Hong, Director of Maximark chain, said that to prosper, retailers need to choose whether to concentrate on selling essential goods to the average shopper or to invest in upscale shopping centers.

Other retail chains have been expanding as fast as they can. Saigon Co-op plans to have ten new supermarkets this year, for a total of 50 nationwide earning total revenue of 11.5 trillion dong, nearly $600 million. The retail chain aims to have 100 supermarkets by 2015. Metro Cash & Carry, a discounter, has started the construction of ‘wholesale centres’ in Binh Duong and An Giang provinces.

Parkson plans to open new shopping malls in Hanoi and Da Nang. Another Family Mart, the Japanese convenience store chain, plans to open five stores in HCM City by the end of the year, and then expand north, aiming to have 100 outlets by the end of 2011.

In the Phu My Hung section of South Saigon, the Crescent Shopping Center will open next year with 200 shops, supermarkets, restaurants, café, and cinema.

In a survey of retail sector development throughout the region, the US consultancy group AT Kearney judges that there’s high potential in Vietnam’s retail market which, it says, will be worth $85 billion by 2012. So far, says Kearney, development has been ragged, uncoordinated and less than professional. The ‘modern sector’ now accounts for 18 to 20 percent of sales, and has plenty of room to grow in comparison with the Philippines, China and Singapore.

Tags: Vietnam retail market, Vietnam Retail Sales