Vietnam’s retail sector down in world ranking

Three years ago, Vietnam was considered the most attractive retail market in the world. However, the country has fallen to the 14th position. But this is not necessarily bad news for Vietnamese retailers.

Vietnam’s retail market saturated?

The annual report on the retail business development index released by AT Kearney showed that Vietnam ranked first among the most attractive retail markets in the globe in 2008. However, the country then fell to the 6th in 2009 and then to the 14th position in 2010.

In 2009, Vietnam began opening its retail market to foreign retailers under the WTO commitments. At that time, experts predicted that Vietnamese market would become the destination of the world’s leading retailers. However, this has not come true yet: the giant retailers are still absent.

“Does the 14th position mean that the market has become saturated with investors?” Dinh Thi My Loan, Deputy Chair and Secretary General of the Vietnam Retailers’ Association raised a question.

However, Loan thinks that maybe the big foreign retailers have not arrived in Vietnam because they still have things to worry about in the post-crisis period. Meanwhile, Vietnam, though having become a middle-income country, remains a country with modest income in comparison with other markets. Therefore, it still cannot attract investors.

Meanwhile, the technical barriers, which foreign investors face when they want to open second and subsequent retail points, are also the reason that keeps foreign investors away.

Meanwhile, Jonh Yeomans, Managing Director of Deloitte Consulting thinks that while the world’s retail industry has a high level of concentration, in Vietnam, there is a high dispersal? level which causes high governance risks.

He also said that Vietnam should be cautious when considering the rankings, and that when putting Vietnam at No. 1 several years ago, AT Kearney did not consider the changes in the Vietnam because of the lack of updated information.

Vietnamese retailers flaring up

It seems that the information about lower ranking is not bad news for Vietnamese retailers. They say that “Every cloud has a silver lining

It is clear that Vietnam’s retail market is still booming. Over the last three years, specialized supermarkets have been mushrooming and many of them have become familiar to domestic consumers, such as home appliance centers Nguyen Kim, Tran Anh, Pico or Best Caring, garment supermarkets Vinatext Mart, Fahasa, or construction material supermarkets Me Linh Plaza, Hoa Sen. A lot of high grade shopping malls have been set up, including Vincom Plaza, Parkson and Diamond Plaza.

Seven Vietnam’s retailers have been listed among the top 500 Asian retailers, namely Saigon Co-op Mart, SJC, PHJ, Nguyen Kim, Mobile World, Big C and Parkson with the growth rate of 21.3 percent, the highest level in Asia Pacific.

Trinh Hoa Giang, General Director of FPT Retailing Company, said that contrary to all predictions, the retail market has been dominated by Vietnamese, not foreign enterprises. Meanwhile, foreign brands such as Metro Cash&Carry, Family Mart, Lotte and Parkson now have to compete fiercely with domestic brands.

Still optimistic, Richard Leech, Managing Director of CBRE Vietnam, said that though Vietnam had fallen to the 14th position, it still ranked third in Asia. Vietnamese consumers’ spending level is equal to 70 percent of income. Therefore, international retailers still highly appreciate the attractiveness of Vietnam’s market.

According to Dang Thuy Ha, Deputy Director of Nielsen, a market survey company, the number of consumers in six main cities in Vietnam accounts for only 14 percent of the total population, but they consume up to 40 percent of fast consumer goods. In the past, only 21 percent of population went shopping at supermarkets, while the figure now is 43 percent.

Meanwhile, Loan believes that Vietnam’s retail market still has great potentials and promises high growth rate for retailers, especially when Vietnamese people respond to the call from the Party “Vietnamese people buy Vietnamese goods”. – Vietnamnet

Tags: vietnam retail industry, Vietnam retail market