Vietnam’s retail market growing rapidly

Being evaluated as a major potential market, Vietnamese retail market has been growing rapidly with sales force growth averaging approximately 23 percent per annum.

Holding the fourth position among 30 countries that are attractive to foreign retailers, Vietnam’s domestic market expects to attract various giants in retail sector.

According to the market research of CB Richard Ellis Vietnam Company (CBRE), retail sales and services revenues at Vietnam’s current prices have gone up by 16 percent in the first six months of 2010, and doubled compared to the same period of 2009.

Having been in Vietnam since 1998, from struggling with the initial point of sale, Big C has expanded to 10 supermarkets directly distributing consumer goods and necessaries in major cities like Hochiminh city, Hanoi, etc.

According to PR manager of Big C Vietnam Duong Thi Quynh Trang, Big C will soon open a supermarket in Vinh city, Nghe An province. Big C’s recent business is very good and they determinedly believe in the future development of the company.

There currently are 30 foreign retailers investing in Vietnam, focusing on mixed commercial centres, supermarkets, convenience stores, health and beauty studios, and food stores.

According to preliminary survey, most businesses are operating effectively and have been expanding their business.

CBRE Vietnam’s managing director Marc Townsend said they forecast that there would be more and more high-class retailers entering Vietnam’s market. The main attentions are the young population and the fast urbanisation of Vietnam. Besides the industrialisation process, which resulted in developments in technology, increasing number of medium and high-income earners has led to changes in lifestyle, including a preference trend for foreign brands.

Fever in market for retail space

Despite being offered at a very high rental rate since being put into use in April 2010, Vincom centre in Hochiminh city has basically filled up more than 90 percent of the total space. Similarly, finding a suitable point of sale in the downtown areas such as Diamond, Sai gon Square, Parkson, etc., is too difficult for many businesses, when most lessees have signed long-term rental contracts.

Currently, the average rental for ground floor and first floor is ranging from $97 to $124 per square metre monthly, two to three times higher than renting a space far from the centre.

According to real estate specialists, the current supply for retail space in Hochiminh city is nearly 318,000 square metres, located in 24 commercial centres and commercial complex. Of that, the filling rate is nearly 95 percent.

By 2013, the supply is expected to increase by three times. Facing the limit of vacant retail space in the centre, retail space supply outside the city centre is estimated to increase by more than 10 times with the participation of a number of new large-scale commercial centres.

There have been many new retail spaces locating in the outside city centre area, such as in District 7 (Crescent Mall, Sunrise Shopping Mall), and District 2 (Metropolis), etc. These new sources of supply are expected to help the city solve the problem of retail space shortage in the city centre for foreign investors.

Tags: Vietnam retail market