Domestic Retailers Have Many Advantages

11:42:47 AM | 13/4/2020

Ranking sixth in the Global Retail Development Index (according to A.T.Kearney, a market research firm), Vietnam has attracted a large amount of investment funds into the retail market. In addition to a series of mergers and acquisitions (M&As) conducted by foreign investors, the growth of domestic investors shows that domestic retailers are holding many opportunities to make breakthrough development and dominate the market share. In this regard, Vietnam Business Forum has an interview with Ms. Vu Thi Hau, President of Vietnam Retailers Association. Thu Ha reports.

Vietnam's retail market in 2019 witnessed many significant strides of domestic and foreign brands. What do you think about the overall picture of the retail market in the past year?

In 2019, Vietnam's retail market was perhaps a very exciting year of development in both quantity and quality. The number of supermarkets and commercial centers in major cities such as Hanoi and Ho Chi Minh City grew by 15%. The growth of retail establishments in rural areas was even greater than in suburban areas. This showed that the modern retail network had broader coverage and entered the niche market.

In 2019, Vietnam's retail market witnessed many mergers and acquisitions of domestic and foreign retailers, showing that the domestic retail system was gradually taking the throne.

Given a large population size, increasing income, high spending power among people aged 35-55, it is certain that the Vietnamese retail market will still attract many domestic and international investors in the coming years.

Last year, the market also witnessed the dynamism and endeavor of domestic retailers. The M&A deal between Vinmart and Masan at the end of 2019 and the takeover of French Auchan-branded supermarket system showed efforts of Vietnamese firms to keep the market share in this field.

It can be seen that Vietnamese firms are trying their best to keep the retail market in their hands. Giant corporations have built their own brands. They often work out their own business development strategies and take solid strides for themselves. In addition, they have policies to employ talents, create a strong human resource system to operate and manage their business. They are ready to take the initiative and try to acquire more capacity and business or expand the network to control the market share before going global. Typically, Masan acquired Vinmart and Vinmart + to establish a new business. Saigon Co-op took over the entire Auchan system (France) to expand its network and increase the market share. These bright spots will add more vitality to Vietnam's retail industry in the next year.

What are the opportunities and challenges for Vietnamese companies in the race with foreigners?

Without doubt, the race against foreign firms is posing a lot of opportunities and challenges for Vietnamese companies.

Vietnam's participation in new generation free trade agreements (FTAs) has contributed to increasing opportunities for domestic retailers to join supply chains run by many large corporations in the world. The establishment of domestic supply chains for agricultural products by retailers and producers has also increased the abundance and freshness of goods, controlled product quality, and built consumer confidence. This is an opportunity for local retailers. And, the advantage of standing in the home market is so clear. We must know this advantage and turn it into an opportunity.

One of the most fundamental challenges to domestic companies is the fiercer competition between domestic and foreign retailers. The competition is mostly about prices, promotions, customer services, and location convenience. In addition, foreign retailers have a lot of experience in managing and operating retail chains. This is their big challenge.

Technology 4.0 in the retail sector has created many development opportunities for businesses with breakthrough changes from diverse, effective and fast service standards based on digital technology. How are Vietnamese companies utilizing opportunities from this industrial revolution?

Vietnamese retailers have many advantages and opportunities to make breakthroughs in the coming time. Industry 4.0 is pressing retailers to serve customers anytime, anywhere to raise their satisfaction. Technology will promote sector development in a faster, more convenient manner, upgrade payment tools or develop new business models such as online business and multi-channel marketing. Currently, shopping habits are increasingly shifted to smartphones and e-commerce platforms, showing that consumers are getting used to technology-enabled shopping. Therefore, technology investment is an indispensable approach for retailers.

However, to run a 4.0 retail system, substantial investment is required, while retailers still have to invest in many other things for their business.

What do you think about market opportunities and trends in 2020?

2020 will be a tough year for the retail industry. But with the efforts of manufacturers and distributors and the participation of authorities in the Buy Vietnamese Campaign that encourages Vietnamese people to give priority to Vietnamese goods on their shopping lists, I hope that domestic retailers will regain market share from foreign retailers.

And, competition is still fierce among domestic retailers and between domestic and foreign retailers as well; we will see many surprises.

Source: Vietnam Business Forum