Retail sector to grow vigorously in Vietnam

Despite the global economic crisis, Vietnam’s retail turnover rose by 18.6 percent in 2009 – an encouraging figure in light of the fact that many retail markets in the world recorded negative growth.

The Association of Vietnamese Retailers (AVR) says this result shows a comprehensive development of the Vietnamese retail business with regard to volume, structure, networks and human resources.

Abundant favourable conditions

The AVR mentions Vietnam’s high and stable GDP growth rate and its young consumer population as important factors behind the success of the domestic retail sector. As much as 57 percent of the country’s population is now under the age of 30; this figure is predicted to drop to 50 percent in the next 15 years. As a result, spending is likely to rise above the current 70 percent of total income.

In addition, the country has adopted many policies to encourage foreign investment and expand domestic markets.

It is estimated that Vietnam’s total retail revenues will hit US$85 billion by 2012.

Obstacles that need removing

The progress of the Vietnamese retail industry is being hindered by certain other factors like a low level of professionalism or small-scale style of doing business, poor quality of human resources and inexperience in management.

Two thirds of retailers have not applied information technology to their management activities and there remain many weaknesses in the industry’s infrastructure.

Trends of development

The AVR says the modern style of retailing via hypermarkets and trade centres will prevail in the future. At present, this type of retailing accounts for only 18-20 percent of the sector, as compared with 34 percent in Thailand, 60 percent in Malaysia, and 90 percent in Singapore.

Selling in local markets or traditional retail shops, the AVR says, will remain a major mode until 2015. However, a change in quality is needed as the rural market is expanding rapidly. Many businesses have succeeded in bringing goods to rural areas and in setting up ‘commerce streets’ consisting of traditional retail shops that combine shopping and tourism.

Another promising tendency for retail is transactions via internet, TV and cell phones and selling through catalogues and multi-level marketing. In the future, there will be a certain number of consumers who like to order everything from their homes.

Tags: Vietnam retail market, Vietnam Retail sector