Vietnamese Retail Market Moving at Slow Pace

Unlike the forecast about attraction of big investors, the Vietnamese retail market has received a small number of investors with no huge projects since early this year.

 

According to the Ministry of Industry and Trade (MoIT), it has received most of foreign investors’ projects to build small wholly foreign-owned supermarkets, retail and wholesale centres, but no the chain projects.

 

Vice Head of the Information & Planning Department under the MoIT, Hoang Thi Tuyet Hoa said, no new retailers have asked for business registration since Vietnam opened its market two years ago.

Despite being licensed to open 15 supermarkets and trade centres in Vietnam, South Korea’s Lottle just inaugurated a supermarket worth US$75 million on January 1 this year in HCM City. Meanwhile, Japan’s third biggest retailer Family Mart have merely planned to join hands with Phu Thai to launch its first shop in HCM City by late this year.

 

According to the report ranking 30 countries with the most attractive retail market worldwide in 2009 recently announced by A.T. Kearney, the Vietnamese market dropped five levels to the sixth.

 

The General Statistics Office showed that Vietnam gained the retail value growth of consumer goods sand services revenues of 20.53 per cent in 2005, up 16.86 per cent on-year and 2.25 times compared to the GDP growth. The country reached the record high growth rate of 31 per cent in 2008, up 4.71 times against the GDP growth in the year. The on-year average retail growth rate was estimated at 26.32 per cent per year between 2006 and 2008, up 3.46 per cent compared to the GDP growth in the period.

 

In addition, the local retail market develops unevenly. Industrial and services products sharply increase, but mainly focusing on urban areas, particularly big cities. Therefore, income and power purchase of these areas are rapidly growing, while those of the rural area still accounting for over 72 per cent of the nation’s population is slowly increasing.

 

In terms of scale and role in the national economic development, the retail market’s contributions are not equal to exports and investment. Even the market’s contribution in GDP tends to slow down. Last year, export turnover, excluding services value, was higher than total retail value of goods and services revenues of the domestic market. In spite of achieving the record high growth of 31 per cent in 2008, the retail value was still nearly US$5 billion lower than the export turnover of US$62.68 billion.

 

Moreover, the local retail market sees lots of latent risks. Notably, the market gained the on-year growth of just 31 per cent last year, while the GDP sharply dropped. Obviously, prices have remarkable influences on the retail market. Last year, the real growth of the domestic retail market was estimated at 6.5 per cent, excluding the price factor. In fact, Vietnam has witnessed a remarkable fall of the retail market since 2007. Statistic figures indicated customers had to pay much money to buy a limited number of goods, but not the market’s impressive development.

 

Managers and enterprises have showed their strong confidence in the pontential of the retail market over the past time but have forgotten that the investment is needed to make it more appealing. However, the Vietnamese retail market still promises big potentials. Despite the global economic downturn in the medium and long term, Vietnam owns potential for economic development and local people’s income is increasing, thus, the demand for goods and services is huge. Several wholly foreign-owned businesses famous in Vietnam such as Big C, Metro and Parkson are expanding their operations. While local firms like Hanoi Trade Corporation (Hapro) and Saigon Corp are also quickening their retail system to sharpen their competitiveness.