Troy Griffiths, deputy managing director of Savills Vietnam, said, “Retail is changing under the influence of consumer behaviour,” adding that there would be more changes with new retail models and facilities serving the consumer needs of experience, entertainment, and creativity.
At Savills’ conference “Next Generation Retail-Embracing design for future opportunities,” held in Hanoi on May 9, Griffiths added that the e-commerce market in Vietnam was continuously attracting investment, with Amazon’s announcement that it would enter the market a recent highlight.
At the conference, retailing experts met to discuss worldwide trends in retail as well as features that investors should be considering if they want to catch a ride on this new wave.
The latest report on Southeast Asia’s e-commerce status by iPrice in 2017 considered Vietnam the fastest-growing market in Southeast Asia in terms of mobile e-commerce growth.
According to the world-leading provider of market and consumer data Statistics Portal, Vietnam had nearly 53.9 million internet users in 2017, which was forecast to increase to about 55.2 million this year.
While other experts agree with Griffiths that technology such as mobile apps, e-commerce platforms, and social networks helped make retail sales a lot easier, they added that the combination of traditional retail and e-commerce was a way of adapting to the changing habits of consumers.
Griffiths said that due to the great market potential with its dynamic, young, and tech-savvy consumers, foreign retailers want to participate in the local market, adding that the younger generation of Vietnam was key to influencing the consumption habits of the population.
There have been stories of success and failure of foreign players in local retail, but at least currently, Vietnam’s market is in ideal condition to grow, thanks to higher incomes and diversified shopping preferences.
Trevor Vivian, executive director of Benoy Group, which specialises in architecture and overall planning, told VIR that malls across Asia are changing and the changes are extremely obvious in Ho Chi Minh City and Hanoi.
“Vietnam has its own sophistication. Take the food industry as an example. In addition to the great taste, Vietnamese food is amazingly beautiful,” Vivian said, emphasising that the local cultural characteristics are an important factor to differentiate the value and pride of Vietnam’s retail sector on the world map.
Malls in Bangkok, which is considered to be one of the food centres of the world, can have 15-25% of space occupied by food courts. “Vietnam is very similar,” Vivian said.
In addition, Vivian mentioned, well-connected, well-planned, and flexible mall design is currently a global trend, as it best serves client traffic from mall to mall and can be adapted easily to serve the customer.
Nicholas Bradstreet, managing director of Savills Hong Kong, showed a similar retail trend and method of application for landlords and retailers in Hong Kong, adding that there are many principles that could be applied in Vietnam, due to the many similar characteristics.
He added that as tech has fundamentally changed how people communicate, retailers would also need to change, suggesting that retailers have to adapt using technology and innovation, under the principle “innovate or die”. In Hong Kong, he said, malls have more cinemas, food courts, health and wellness establishments, and other luxury offerings. In addition, retailers there now paid more attention to personalising the customer experience.
Griffiths said that after launching a game centre called Happy Hour with e-games, board games, and other offerings on the top floor of Ho Chi Minh City’s Crescent Mall, the mall experienced much better sales and profits, adding that this can be a good example for how malls change to serve consumers.
Last year, Vietnam’s retail industry achieved sales of about US$129.6 billion, a year-on-year increase of 10.6%. As the local economy was among the fastest-growing economies in Southeast Asia, Bradstreet of Savills Hong Kong said that retailers and landlords need to be prepared for the new trends in retail such as integrating more entertainment value, food courts, and pop-up stores in order to best introduce their products and promote their brands.
The experts at the Savills conference also saw a great opportunity for tourism retail in Vietnam thanks to the large number of Chinese visitors looking for shopping experiences. To expand this segment, Vietnam can develop more retail facilities in their locations with high numbers of Chinese tourists such as Danang and Halong. Last year, Vietnam received a record 12.9 million foreign visitors, about one-third of them Chinese.
While very confident about the changes meaning a better future for retailers in Vietnam, Griffiths expressed his concern about the challenges these changes will mean for the local market, especially in Hanoi.
While a lot of retailers have already changed their styles, most have held on to the standard format of retailing. For example, fashion retailers still look for huge spaces of 1,500 to 3,000sq.m, which are almost impossible to find in a mall in the inner city of Hanoi.
High rents and low availability of retail space is therefore causing trouble that make major foreign brands stay away from Vietnam, no matter how much potential they see in the market.
Griffiths suggested that malls with large, high-quality spaces should be developed in less crowded areas of the city, such as its western parts, instead of in the inner city to attract more foreign retailers.