UK Retailers Interested in Vietnam Market

Since 2009, Vietnam has completely opened up its market to foreign retailers. This move is compared to an important breath of fresh air for the retail market and a significant leverage to give a facelift to the Vietnamese retail industry. It also provides more choices for consumers, creates a driving force for Vietnamese retailers to enhance supplying capacity and boosts fair competitiveness. Retail sales grew 18.6 percent in 2009 and 25 percent in 2010, an impressive growth in the tough time. Significant growth in retail sales showed a huge consumer demand in Vietnam. The number and differentiation of new participants reflects the potentiality of the Vietnamese market in the eyes of investors, with up to 70 percent rating retailing above education, real estate or healthcare in terms of attractiveness. The year 2010 witnessed tremendous efforts of distributors and retailers in expanding restructures and networks, training personnel, and improving service for consumers

According to the rating of global consulting firm AT Kearney, the attractiveness of Vietnam's retail market ranked 14th in the world in 2010, higher than Indonesia (16) and Malaysia (17). Vietnam ranked sixth in 2009, and it made a dramatic breakthrough after moving up three places, outstripping India, to be on the top in 2008 on account of fast-growing economy, foreign investor-friendly policies, and public keenness on modern retailing models. Thus, it is clear that after four years joining the World Trade Organisation (WTO), the Vietnamese market has always made headway and the retail industry has increasingly asserted its roles and position in the national economy, becoming one of 15 most attractive markets to foreign investors. Retailing is the most attractive field to investors in Vietnam. Riding out all challenges and barriers, Vietnamese distributors and retailers are striving to accomplish its mission as an effective bridge for producers and consumers and take part in market stabilisation.

 

According to industry specialists, the Vietnamese retail market will continue making new breakthroughs in 2011 and become more attractive as its scale is larger while consumer consumption and demand increases. In 2012, the scale of Vietnamese retail market may reach US$113 billion and a population will grow to nearly 89 million people. Given its huge potential as its established foundations, the Vietnamese retail market will surely have higher rate in the eyes of investors.

 

Recently, a series of luxury brands like Louis Vuitton, Hermès and Gucci continuously flocks to the Vietnamese market. Previously, many large foreign distributors like Metro Cash & Carry (Germany), Bourbon (France), Parkson - a brand of Lion Group (Malaysia), Zen Plaza (Japan) and Diamond Plaza (South Korea) have made present in Vietnam. The presence of world-acclaimed names not only stirs up the Vietnamese retail market but also indicates that the Vietnamese retail market is exerting a pull on popular and upmarket retailers.

 

At present, many international distributors are planning to enter the Vietnamese retail market, for example, Wal-Mart (the United States), Carrefour (France) and FairPrice (Singapore). Tesco - the largest retailer in the United Kingdom and the third in the world - is also planning to make inroads into the Vietnamese market, increasing its international presence to 15 countries. In ASEAN, Tesco is the top retailer in Thailand and Malaysia after it succeeded in a stiff competition with the French Carrefour.

 

A Tesco representative said the attractiveness of retail markets of Vietnam, the Philippines and Indonesia is growing as a result of strong economic growth and large population which climbs to around 400 million people in three countries. This is indeed a market with a huge demand given a population of 87 million people, economic growth of 8 percent (in 2009), and income per capita exceeding US$1,000 (in 2010). Tesco always regards Vietnam as a potential and attractive market. The UK-based largest retailer has revealed its intentions to expand the business areas in Southeast Asia where Vietnam is considered the top destination.

 

Tim Brownbill, British Consul General in Ho Chi Minh City , said the presence of multinational distributors will help bring retailing businesses in Vietnam to a new turning point of competition. He noted that British retailers are very interested in Hanoi and Ho Chi Minh City markets. Some companies are weighing up their presence in this market. Especially, a group of British retailers will go to Vietnam to survey its retail market before making investment decisions. The investment of UK retailers will benefit consumers in Vietnam. British goods of high quality and different models will be introduced to consumers who will have more choices with their money. In addition, consumers will benefit from competition of Vietnamese and British goods as they will be able to choose better one at more reasonable prices.