Increased Pressure over Domestic Retailers

In 2008, Vietnam’s retail development index topped the list. In addition, citizens’ increasing average income means that there is a burst in consumer demand. This is one of the reasons which turn Vietnam into a magnet for international businessmen. Although differences in culture and climate compared to traditional markets exist, global retailers are still willing to make changes to their designs and many other necessary factors to be suitable with Vietnamese consumers’ taste, and thereby boost consumption here.

 

When the door is wide open and the market is fair to every retailer, both domestic and foreign, foreign retailers have helped create a colourful, professional and very “Vietnamese” retail environment. However, a real battle accompanies this attractive environment. Representative of UK Trade and Investment in Vietnam, Mr Mc Thomson also admits that the retail market in Vietnam is still highly competitive. Investment into this market is a long road full of challenges, requiring enterprises’ real patience and good vision.  

 

Currently, Vietnam’s retail market is in its prime and witnessing positive changes. There is a significant increase in retail formats and number of retailers. Such giants as Saigon Co.op, Vissan and Maxi Mart, etc. are expanding their operation network and gaining advantages in the market. However, attack of global distributors accompanies the growth of domestic retail brand names. Lotte Mart, KFC, and Metro, etc. can be given as examples. Moreover, many multinational companies are also accelerating their expansion of distribution network, including Coca Cola, Adidas, and Unilever, etc. It is this diversity that makes Vietnam’s retail market become highly competitive in coming time, and exerts a considerable impact on domestic retailers’ benefits.

Vietnamese retailers are seeking every way to expand their network and distribution channels to bring products to consumers in the most convenient and fastest way. For instance, Saigon Co.op has kept opening new supermarkets and stores recently. Investing between two and ten billion dong in a new food store, it is the first time that Saigon Co.op has split the domestic retail market and entered residential areas and blocks of apartments, creating a middle-class distribution channel and is quickly occupying the domestic market. It is a unique feature of Saigon Co.op to enter a highly potential market segment of Vietnam which is currently left untouched. Entering these market gaps and opening a new distribution channel which is different from such traditional distribution channels as markets and grocery stores are a smart approach for Co.op.

 

Being a late comer compared to other retail systems, Speedy quickly gains customers’ trust with its convenience and devoted service. The presence of Speedy brings lots of excitement to the middle-class distribution channel. Currently, ten stores of Speedy are thriving with their 24-hour service. Experiences for success of Speedy lie in its confidence, activeness and customer satisfaction.

 

Fierce competition from global retailers might be a big obstacle for Vietnamese retailers, but new challenges are also their opportunities. Whether to successfully grasp and take full advantage of such chances depend on domestic enterprises’ vision, flexibility and ability to enter every corner of the market and master the domestic market. State’s activeness in perfecting macro policies on managing the retail market and creating favourable conditions for domestic enterprises to develop is also of extreme importance.