Vietnam downgrades in A.T.Kearney’s retail market ranking

Global well-known consulting firm, US-based A.T.Kearney has announced the annual Global Retail Development Index (GRDI) for 2011 in which Vietnam slid nine grades to the 23rd position among 30 surveyed emerging economics

Global well-known consulting firm, US-based A.T.Kearney has announced the annual Global Retail Development Index (GRDI) for 2011 in which Vietnam slid nine grades to the 23rd position among 30 surveyed emerging economics, after China, India, Sri Lanka, Morocco, Kazakhstan.

A.T.Kearney experts said that the weakness of Vietnam in infrastructure and costly space rental are barriers for foreign rentals. Meanwhile, domestically traditional distribution channels still are dominating the market while new forms are emerging. Competition is fiercer, that’s why foreign investors find it difficult to participate.

This is the third consecutive year Vietnam’s retail market was downgraded. In 2008, Vietnam jumped three grades, surpassing India to become the world’s most attractive market thanks to strong economic growth, improved policies which were friendlier to foreign investors and demand of consumers on the modern retail forms. One year later, Vietnam’s retail market only ranked the sixth in terms of attractiveness, and lost the Top ten attractive retail markets in 2010.

However, the firm also noted that Vietnam still has certain attractiveness thanks to the size of market as well as number of consumers. By 2012, the market may reach the size of $113 billion and the population is estimated at nearly 89 million people.

From 2009, Vietnam opened the door of market by allowing fully foreign-invested retailers to operate. Famous firms such as UK-based Tesco or Singapore’s FairPrice are planning to join Vietnam’s market within this year. But A.T.Kearney also warned that the world economy has not recovered totally so multinational companies remain cautious in expanding their network.

Data from the General Statistic Office (GSO) showed that total retail sales and service turnover in 2010 reached around $80 billion. During the first five months of 2011, the market size gained 762.7 trillion dong ($40 billion), growing 22.5% against one year earlier. Excluding price factor, the growth was 6.4%.

Real estate management firms have for many times assessed that Vietnam’s retail space cost is too high despite the supply is rising and rentals are tending to dip in some areas.

2011 is the tenth year A.T.Kearney announced GRDI reports which were conducted in 30 emerging economies and evaluated based on factors: national risk, population size, prosperity and saturation level of retail market. – Vietnamnet

Tags: Global Retail Development Index 2011, GRDI 2011, vietnam retail industry, Vietnam retail market