As the population nears 100 million, Vietnam’s retail sector, now valued at over US$142 billion, is emerging as a magnet for global brands. E-commerce, accounting for 16% of the market, has seen a meteoric rise, with projections estimating its value to soar to a staggering $32 billion by 2025. This potential has undoubtedly attracted a slew of international retailers.
Supermarkets: Still a Favourite among Vietnamese Consumers
Despite the e-commerce boom, supermarkets remain a preferred retail option in Vietnam. With a diverse product range, seamless shopping experience, and quality assurance, it’s no surprise that supermarket revenues are poised to touch VNĐ110 trillion ($4.5 billion) this year, marking an 8.8% growth year-on-year.
Foreign Investment in the Retail Sector: A Deep Dive
From the onset of 2023, major international brands have heightened their capital investments in Vietnam. Notably:
- Japan’s MUJI has expanded its footprint, boasting 11 stores between Hanoi and HCM City.
- Japan’s Uniqlo, continuing its aggressive expansion, unveiled its 19th store in Hà Nội in 2023.
- Thai conglomerate, Central Retail, plans an unprecedented investment of $1.45 billion through 2023-2027, intending to double their presence in Vietnam to 600 stores.
However, this influx of foreign investment challenges local retailers, pressing them to bolster their strategies against these global giants.
Local Retailers Holding Ground
Vietnamese businesses have made significant strides in the retail domain:
- Saigon Co.op acquired the entire retail system of France’s Auchan in 2018.
- VinCommerce purchased Singapore’s Shop&Go in 2019.
- THISO, a THACO Group subsidiary, acquired South Korea’s Emart Inc’s operations in Vietnam.
The resilience and expansion of domestic chains, like Vingroup’s Vincom Retail and the WinMart chains, attest to their enduring dominance in the retail landscape.
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Experts attribute this to their intrinsic understanding of local consumers, aggressive digital transformation, and resourceful human capital management. For sustainability, local firms need to further modernise, lean into the digital era, and closely align with domestic producers, ensuring a steady supply chain.
The Road Ahead: Projections and Strategies
Rong Viet Securities anticipates a revival of the retail industry in late 2023, with a clearer upward trajectory in 2024. As urbanisation progresses, Tier 2 and 3 regions will see retail expansion. Meanwhile, promotional events in Hanoi and other areas, along with state-backed initiatives, aim to propel consumer demand and GDP recovery in the year’s concluding months.
