Bright Prospect of Vietnam Retail Market

“This year, the confidence index of Vietnamese consumers has dropped to 60.9 points against 88.1 points of the second half of last year. However, compared to other countries, the index is still seen positive. Total retail value of consumer goods and services has increased between 18 and 20 %”, said Dr Dinh Thi My Loan, Vice Chairperson and Secretary-general Vietnam Retailers Association at a conference named “Consumption Trend and Prospect of the Vietnamese Retail Market 2010” recently held by the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam-EU Business Forum in Hanoi.

High growth but still failing to meet domestic demand

Statistics showed that, in 1995, Vietnam had only ten supermarkets and two trade centres. As of late 2008, the figure reached 8,300 markets, 400 supermarkets and trade centres, mostly located in the two cities of Hanoi and Ho Chi Minh City. Hanoi had 350 markets, 85 supermarkets and 14 trade centres. According to experts, Vietnam has moved to a modern retail market which accounts for 15 % of the country’s annual GDP from an old model. By 2012, the retail revenue is expected to reach US$85 billion.

However, Loan added, in Hanoi a great number of new shopping centers are being built, including Hang Da, Thanh Cong, Giang Vo and Mo markets, but it is not enough to meet the local consumption demand. Compared to the combined population of around 16 million people in Hanoi and Ho Chi Minh City, the number is too modest.

Research conducted by Nielsen Market Research Company indicated that the number of Vietnamese people coming to shops and modern supermarkets has been on the rise. In 2007, only 11 % of surveyed consumers said they considered supermarkets as their main shopping channel and the rate climbed up to 21 % in 2008. In 2005-2007 period, the average shopping frequency of local people is twice a month, but now the figure is three times per month.

2010: The year for Vietnamese retail market

Loan said “the local retail market is developed but unsustainable. It faces labour shortage, particularly qualified human resources, and financial difficulties. However, it remains a potential market for foreign firms”.

Matthias Duchn, Director of EuroCham Hanoi, said the year of 2010 is a good time for the Vietnamese retail market as it has become a more attractive destination in Asia with a sustainable growth rate and a stable consumption demand.

Nguyen Huong Quynh, Head of the Consultancy and Retail Measurement of the Nielsen Market Research Company said, over the past six months, several consumer commodities have seen strong growth, with instant tea up 66 % on-year. It was followed by energy drink (25 %) and beer (24 %). She added that products which are considered good for heath are favorites. Therefore, fresh milk and dish soap also have the brand “Containing green tee extract” to attract consumers. “In the future, the competitive advantages will belong to producers who make products good for health”, she noted.

Quynh said the local retail market’s development trend in the coming time is that producers will focus on untapped rural areas which make up 74 % of Vietnam’s population. “Retailers should build effective distribution channels and pay attention to places and sources of commodity as well as maintaining the stable number of buyers”, she highlighted.

Besides, the modern retail services now account for just between 18 and 20 % of the country’s total retail structure. If compared to the level of 33 % in the Philippines, 51 % in China and 90 % in Singapore, the Vietnamese retail market has much potential for investors. In reality, local consumers’ demand is increasing and diversified, especially they get access to sales via mobile phones, TV shopping, Internet and catalog. Products which ensure environmental factors such as safe, clean and environmentally-friendly packaging will also lure buyers’ attention.

Experts forecast that, in the next two or three years, many foreign retailers will enter Vietnam to develop large-scale trade centres.

Source: VCCI

Posted by VBN on Dec 8 2009. Filed under Retail. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry