Competitive Pressures Create Momentum for Vietnam’s Retail Industry

In reality, the Vietnamese retail industry proved its competitive strength in the past years. While this industry retreated in countries, it enjoyed a positive growth in Vietnam. Total retail sales of goods and services reached US$90 billion in 2011, up 24.2 percent from 2010. If price-rising factors were excluded, the growth was 4.7 percent.

 

Retailers made an endeavour to expand spaces and improve service quality. They have built a variety of shopping spaces like general stores, specialised stores, convenience stores and outlets. Notably, more than 8,600 traditional markets are open, of which about 2.6 percent are rated first-class, 11.2 percent are rated second class and 86.1 percent are rated third class. Both domestic and foreign specialists highly appreciated long-term growth prospects of the Vietnamese retail market.

 

In spite of holding development potentials and advantages, Vietnamese retailers even lose ground to foreign rivals. Limitations of Vietnamese retail market include small market size and weak purchasing power. The retail industry is currently dominated by traditional marketplaces. Modern retailing channels account for about 20 percent of retail revenues (40-42 percent in Ho Chi Minh City and 13 percent in Hanoi). Vietnamese retailers are typically weak in four aspects: Professionalism, long-term strategy, finance and logistics. Worse, endemics in retail market development strategies lie at all three levels: State, industry and enterprise.

 

Ms Nguyen Thi Hanh, General Director of Ho Chi Minh City Trade Cooperative Alliance, said: “The opening of retail markets is an inevitable trend. After the market is open, foreign retailers will be able to invest in Vietnam more favourably and easily. With financial powers, they can easily gain ground in search of retailing spaces. In addition, long-term experience and global presence are also their advantages and pressures on Vietnamese competitors. But, Vietnamese companies have better knowledge of local consumers and their behaviours. Plus growing trust of Vietnamese consumers in Vietnamese brand names, I think we will succeed.”

 

Moreover, competing pressures from foreign retailers will create a driving force for domestic retailers to improve and promote their inherent strengths. Besides, they need to join hands together to expand their networks and take advantage of mutual strengths for joint development. They should also forge strong cooperation with manufacturers to ensure the best supply chain to power up the domestic retailer force.

 

E-commerce channel is also an opportunity for Vietnam retailers. Websites, social networks and mobile phones are generating revenues for many Vietnamese retailers.

 

Besides, according to Ms Hanh, the retailer community needs to define modern channels as the only way to move towards a competitive distributor/retailer market of a developed economy and orientate investors to society and community-targeted business principles.