Local pie of retailing in Vietnam is both bitter and sweet

AEON's fifth centre in Ha Dong in Hanoi attracts many customers with children with many playful areas in the mall. — nemtv

HANOI (Vietnam News/ANN): As one of the most dynamic economies in the region, Vietnam's retail market is attractive for many foreign investors, but it can also be challenging at the same time.

Trang Lê, head of Research and Consulting Services, real estate and retail services firm Jones Lang LaSalle (JLL) Vietnam told Vietnam News: "Vietnam is in the golden phase for economic development, especially in retail."

Vietnam is forecast to produce the highest GDP growth rate in the dynamic Southeast Asia region with 6.6 per cent. Its growing urbanisation is expected to bring an annual growth rate 2.6 per cent in the urban population by 2030, the highest in Southeast Asia.

Trang believes as more people move into cities and take on higher-value manufacturing and service jobs, their incomes will also increase.

She calculated the high growth of middle class population at 19 per cent in 2020-25, including 70 per cent of people of working age, is a key driver of strong retail growth. At the same time, experts said increasing tourism also helps lift the market.

Since 2014, the market has witnessed a series of mergers and acquisitions (M&A) deals. An example is Berli Jucker’s acquisition of Metro Cash & Carry Vietnam, the largest M&A deal ever in Vietnam.

Shortly after, Central Group – another Thai giant – acquired Nguyễn Kim Trading JSC, Vietnam's leading electronics retailer, and Big C Vietnam, the second-largest supermarket chain in terms of the number of stores in the country.

E-mart – South Korea's leading retailer – also officially joined the playground in 2015 with a US$60 million shopping mall in the north of HCM City.

Also from Korea, Lotte Mart has been quite successful with a series of supermarkets and shopping centres across the country.

AEON, one of the world's leading retail groups from Japan, is also gradually expanding its network with a fifth centre in Hà Đông in the capital city opening last November. Its Japanese fellow, Takashimaya presented in a prime location in HCM City four years ago.

However, foreign retailers are also faced with fierce competition. The evidence is that big brands like Auchan, Parkson and the series of foreign convenience store brands had to shrink their networks, withdraw from or struggle in the market.

Some retailing experts considered Parkson’s loss as due to the less diversified tenant structure which focused too much on fashion and cosmetics while neglecting dining and entertainment while Auchan and Shop & Go failed to align with market trends.

Trang told Vietnam News: "Foreign retailers need to conduct careful studies to better understand the local trends."

She cited AEON, offering a prime spot for families to shop and relax, as one of the successful models.

According to JLL's observations, besides the focus on food and beverage, plus entertainment to attract customers, retailers should develop more green spaces, increase the application of technology and big data, set up shopping omni-channel to keep the hearts of customers.

Trang added: "Creative efforts to enhance the shopping experience will translate into success of the retailers." — VNS