Vietnam Retail Industry Facing Many Challenges

According to the statistics of the Vietnam Retailers Association, in the first nine months of 2014, the total retail sales of the goods and services increased 11.12 percent, earning VND2,145,470 billion. Sales of the state-owned companies holds 10.1 percent of the total, up 8.4 percent; sales of the non-state companies accounts for 86.5 percent, up 11.1 percent; sales of FDI companies accounts for 3.4 percent, up 21, 6 percent. It is expected that in the whole 2014, the total retail sales of the goods and services will reach VND2,970,300 billion, up 11.3 percent compared with 2013. By the end of 2013, Vietnam has about 724 supermarkets and 132 trade centres, 8,546 markets, and about one million small-scale household stores. By 2020, the country will have about 1,200 to 1,300 supermarkets; 180 trade centres, and 157 shopping centres.

 

 In 2014, Vietnam is considered a global retail market that creates both challenges and opportunities to retailers. Retailers could obtain a lot of opportunities if they could understand and adjust their strategies to match with the general context.

 

Currently, current distribution channels accounts for 25 percent; meanwhile, traditional channels accounted for 100 previously. The experts predict that modern retailing will boom up and become a momentum in the retail industry of Vietnam. In 2014, there are many large retailers like Lotte (Korea) and Aeon (Japan) making strong presence in Vietnamese market. And now some large retail groups are researching and seeking investment opportunities and other retailers such as Walmart, Auchan, Robinson starting their retail operations in Vietnam. Despite a lot of opportunities, domestic retailers may compete hard with foreign enterprises.

 

At the forum that was held by the Vietnam Retailers Association on Oct 13, 2014, experts said that strong growth of global retail industry has posed many challenges to Vietnamese retailers. Moreover, this also opens many opportunities for the businesses who understand and adjust strategies successfully in accordance with the general context.

 

According to Dinh Thi My Loan, Chairperson of the Vietnam Retailers Association, there are more and more retailers to penetrate Vietnam's market. And this trend will give businesses both of challenges and opportunities.The growing number of retailers in Vietnam forces domestic retailers to enhance their competitiveness through improvement of customers services and necessary skills. At the same time, management authorities must consider before granting permits to retailers.There should be more transparent and clearer policies to attract foreign investment in this sector.

 

 Recent investment projects of Thailand are mostly related to retail and consumer goods sectors; for example, the Berli Jucker (BJC) has acquired the Metro Vietnam; the Robins has opened trade centres in Hanoi and the 7 Eleven are researching markets in Ho Chi Minh City. According to Vu Vinh Phu, Chairman of the Hanoi Supermarkets Association, the growing number of the Thai supermarkets in Vietnam will increase Thai imports to the Vietnamese markets.

 

Thai goods are highly favoured by consumers due to their good quality and reasonable prices. With a population of over 90 million, Vietnam is an important market to compete with China in the South East Asian market. The establishment of Thai distribution agents to import more Thai goods to the supermarkets and retail stores in Vietnam is a sign that the Thai people are planning a big strategy when tariff barriers between the two countries are completely removed in 2015 .

 

 According to experts, the most important strategy to compete with foreign goods in general and Thai products in particular is to increase the quality of Vietnamese products and efficiently organise a closed chain from the production to the distribution.

 

Consumers are paying more attention to quality of products rather than cheap products that lack origin. It is expected by 2020, domestic distribution channels will account for 80-90 percent of the total channels if the price of the Vietnamese products could be more competitive and customer service and quality of products are improved.