Customers shop at a Vinmart supermarket in Hanoi (Photo: VNA)Hanoi (VNA) – Vietnam, ranked amongthe world's top 30 retail markets withthe best opportunities by A.T. Kearney, continues to prove itsattractiveness as two foreign investors have entered the local retail sector thisyear.
After forming a partnership with Xiaomi Inc. ofChina, the Digiworld Joint Stock Company opened the first Mi Store in Vietnamin early January to distribute Xiaomi products like mobile phones, smart watches,portable chargers, LED lamps and vacuum cleaners. Mi Stores are expected to bepresent in 15 big cities nationwide by late 2018.
GS25 also opened its first store in District 1,Ho Chi Minh City, last month after establishing a joint venture with Sonkimlandto become the first Korean brand to enter the fierce competition amongconvenience stores in Vietnam. It plans to open more than 2,500 stores in thecountry in the next 10 years.
The market has also witnessed several bigmergers and acquisitions (M&As) in the retail sector in recent years,including the respective purchases of the Metro Vietnam and Big C Vietnamsupermarket chains by Berli Jucker and Central Group of Thailand.
Aside from M&As, many major retailers fromSoutheast Asia have sought to partner with domestic businesses to developretail stores in Vietnam, such as the partnership between Mapletree and NTUCFairPrice companies of Singapore with the Saigon Union of Trading Cooperatives(Saigon Co.op).
Meanwhile, Vingroup, a major conglomerate ofVietnam, also bought the supermarket chains of Ocean Mart, Vinatexmart andMaximark.
Vu Vinh Phu, former Chairman of the HanoiSupermarket Association, said there are about 1,000 convenience stores andseveral hundred supermarkets and shopping malls in the country at present, asmall number compared to the population of more than 90 million. Meanwhile,there are few capable Vietnamese enterprises like Saigon Co.op and Vingroup.
Therefore, the local retail market is a fertilesector for foreign retailers with capital, business technology, businessgovernance and global purchasing and distribution networks, he added.
According to the Hanoi Supermarket Association,about 50 percent of the retail market share in Vietnam belongs to foreignfirms, a figure which could be higher in reality. As a result, domesticretailers could shrink in the future since they lack experience, investmentscale and manpower.
Insiders forecast the Vietnamese retail marketwill continue to be a magnet for businesses, and rural areas will remain anattractive destination in 2018 and beyond.
A report by market research company Nielsenshows that fast-moving consumer goods posted growth of 7 percent in rural areasin 2017, doubling their expansion in urban areas. While confectionary sales insome cities declined, they rose 15 percent in rural areas. The rural market hasalso become the main market for some companies.
Insiders have said if businesses make good useof traditional sales channels and develop distribution networks well, they willbe able to dominate the rural market.-VNA
VNA
