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Retail giants target Viet Nam

2013-06-18 14:26:27

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Foreign retail giants have shown their hunger to develop modern retailing in Viet Nam by pouring money into trade centres and supermarkets.

 

According to the Institute of Information and Business Research (IIB), the retail industry in the country, which has a population of 88 million, holds huge potential despite local consumers tightened their spending in recent years due to the economic downturn.

 

The turnover from retail sales is expected to increase by 8.5 per cent per year in the 2013-15 period, with food and foodstuff being the most important products. The institute predicted that the market would witness expansion of supermarket chains and the tapping of multinational retail groups.

 

French supermarket chain Big C now has more than 20 supermarkets in Viet Nam and its expansion continued with the recent opening of new outlet in PhuTho Province and the start of construction on a complex in QuangNinh Province.

 

DauTu (Investment) newspaper has reported that the Korean Lotte group plans to develop 60 supermarkets and trade centres in Viet Nam.

 

In addition, Japanese retailer Aeon plans to open two trade complexes each year in the country until 20 have been built by 2020 at a total cost of US$1.5 billion. Aeon has also joined forces with the Trung Nguyen Group to develop 500 Ministop convenient stores in from 2012 until 2017.

 

The market has also seen the return of French group Auchan, which has pledged to spend $500 million over the next decade, several years after its business operations were interrupted in the country. According to Vo Van Quyen, director of the Ministry of Industry and Trade's Domestic Market Department, after Viet Nam officially joined the World Trade Organisation in 2007, the percentage of modern retail channels has doubled to 20 per cent. The figure is expected to reach 43 per cent by 2020.

He said that the penetration of foreign retailers did not break the country's retail planning, insisting that there was room for local businesses to grow alongside the competition from foreign giants.

 

The IIB's director Dinh The Hien said that alongside growing professional retail channels such as Metro, Big C, Lotte, Coop Mart and Maximart, domestic producers such as Masan, Vissan, Vinamilk and Trung Nguyen would be able to develop their own distribution systems to increase the market accessibility and promote their brands.

 

According to general director of SaiGonCo.op Nguyen Thi Hanh, it's time for local retailers to develop the supermarket model to increase their market share and co-exist and grow with their foreign retail competitor.

 

The link between producers and retailers should be enhanced to ensure the adequacy of goods supply sources, said Nguyen Tien Vuong from the Ha Noi Trade Corporation. Statistics show that 21 foreign retailers are currently present in Viet Nam. At the end of 2012, there were about 130 trade centres and 700 supermarkets nation-wide. Those numbers are expected to reach 180 and 1,200 respectively by 2020, according to the ministry.