Retail giants target Vietnam

Foreign retail giants have shown their interest in developing modern retailing in Vietnam by pouring money into trade centres and supermarkets.

According to the Institute of Information and Business Research (IIB), the retail industry in the country, which has a population of 88 million, holds huge potential although local consumers have tightened their belt in recent years due to the economic downturn.

The turnover from retail sales is expected to increase by 8.5% per year in the 2013-15 period, with food and foodstuff being the most important products. 

The institute predicted that the market would witness expansion of supermarket chains and the tapping of multinational retail groups. 

French supermarket chain Big C now has more than 20 outlets in Vietnam and its expansion continued with the recent opening of a new one in Phu Tho province and the start of construction on a complex in Quang Ninh province, both in the northern region.

Dau Tu (Vietnam Investment Review) has reported that the Korean Lotte group plans to develop 60 supermarkets and trade centres in Vietnam. 

In addition, Japanese retailer Aeon plans to open two trade complexes each year in the country which will have been built by 2020 at a total cost of US$1.5 billion. Aeon has also joined forces with the Trung Nguyen Group to develop 500 Ministop convenient stores in the country from 2012 until 2017. 

The market has also seen the return of French group Auchan, which has pledged to spend US$500 million over the next decade, several years after its business operations were interrupted in the country.

According to Vo Van Quyen, director of the Ministry of Industry and Trade's Domestic Market Department, after Vietnam officially joined the World Trade Organisation in 2007, the percentage of modern retail channels has doubled to 20 percent. The figure is expected to reach 43 percent by 2020. 

He said that the penetration of foreign retailers did not break the country's retail planning, insisting that there is room for local businesses to grow in the context of fierce competition from foreign giants. 

The IIB's director Dinh The Hien said that alongside growing professional retail channels such as Metro, Big C, Lotte, Coop Mart and Maximart, domestic producers such as Masan, Vissan, Vinamilk and Trung Nguyen would be able to develop their own distribution systems to increase the market accessibility and promote their brands.

According to general director of Sai Gon Co.op Nguyen Thi Hanh, it's time for local retailers to develop the supermarket model to increase their market share and co-exist and grow with their foreign retail competitor. 

The link between producers and retailers should be enhanced to ensure the adequacy of goods supply sources, said Nguyen Tien Vuong from the Hanoi Trade Corporation. 

Statistics show that 21 foreign retailers are currently present in Vietnam. At the end of 2012, there were about 130 trade centres and 700 supermarkets nation-wide. Those numbers are expected to reach 180 and 1,200 respectively by 2020, according to the ministry.

VNA/VOV online