Shoppers at a Bach Haa Xanh store (Photo: tinnhanhchungkhoan.vn)Hanoi (VNS/VNA) - Vietnamese retailcompanies are in pole position to seize the lion’s share of the market,especially after some foreign businesses have left the country.
With total sales of up to 180 billion USDpredicted for 2020, the Vietnamese retail market is drawing attention ofinternational companies posing challenges for local firms.
According to the Ministry of Industry and Trade,total retail sales in the first seven months of this year was up 11.56 percent yearon year to 2.8 quadrillion VND (120.36 billion USD).
Between 25-30 percent of the modern market is madeup of foreign companies which include 15 percent of shopping centres, 50percent of convenience stores and 10 percent of minimarket retailing.
Meanwhile, the portion of Vietnamese produce inthe retail system, especially supermarkets, is quite high.
According to the global measurement companyNielsen, Vietnam’s retail market has a high growth rate that is supported byincreasing per capita income, an emerging macro-economy and ratified free tradeagreements (FTAs).
Dinh Thi My Loan, Chairwoman of the Association ofVietnam Retailers, said market conditions are becoming better for modernretailing, which is convenient, fast and integrated with traditional retailing.
The exit of foreign companies such as Auchan andShop & Go proves domestic retailers have become stronger and have a biggerstake in the domestic market, she said.
Business insiders and analysts have said theVietnamese retail market will get more competitive with local firms being moreaggressive, proactive and well-positioned.
Vietnamese firms understand the taste and demandof Vietnamese consumers, giving them an advantage over foreign companies,according to Tran Duy Dong, Director of Domestic Market Department under theMinistry of Industry and Trade (MoIT).
Young population, high demand of getting connectedand rapid urbanisation are among other factors that could drive the retailmarket up.
The regulation of economic needs test (ENT) isstill being carried out, which is considered a good tool and a technicalbarrier to limit the participation of foreign retailers while supporting localcompanies.
With total sales of up to 180 billion USDpredicted for 2020, the Vietnamese retail market is drawing attention ofinternational companies posing challenges for local firms.
According to the Ministry of Industry and Trade,total retail sales in the first seven months of this year was up 11.56 percent yearon year to 2.8 quadrillion VND (120.36 billion USD).
Between 25-30 percent of the modern market is madeup of foreign companies which include 15 percent of shopping centres, 50percent of convenience stores and 10 percent of minimarket retailing.
Meanwhile, the portion of Vietnamese produce inthe retail system, especially supermarkets, is quite high.
According to the global measurement companyNielsen, Vietnam’s retail market has a high growth rate that is supported byincreasing per capita income, an emerging macro-economy and ratified free tradeagreements (FTAs).
Dinh Thi My Loan, Chairwoman of the Association ofVietnam Retailers, said market conditions are becoming better for modernretailing, which is convenient, fast and integrated with traditional retailing.
The exit of foreign companies such as Auchan andShop & Go proves domestic retailers have become stronger and have a biggerstake in the domestic market, she said.
Business insiders and analysts have said theVietnamese retail market will get more competitive with local firms being moreaggressive, proactive and well-positioned.
Vietnamese firms understand the taste and demandof Vietnamese consumers, giving them an advantage over foreign companies,according to Tran Duy Dong, Director of Domestic Market Department under theMinistry of Industry and Trade (MoIT).
Young population, high demand of getting connectedand rapid urbanisation are among other factors that could drive the retailmarket up.
The regulation of economic needs test (ENT) isstill being carried out, which is considered a good tool and a technicalbarrier to limit the participation of foreign retailers while supporting localcompanies.
But they must maximise their strengths now toseize the market as ENT regulation will be eliminated in accordance to the FTAsand trade pacts to which Vietnam is a member.
According to the market research firm Savills, theVietnamese retail market will be developing steadily by 2021 thanks toincreased demand for entertainment, modern shops and minimarkets, and appareland textile, which are forecast to grow at annual rates of between 6 percent and10 percent.
Vu Vinh Phu, Chairman of the Hanoi SupermarketAssociation, said multi-channel retailing will dominate the market in thefuture. The model combines shopping centres with other services such ascatering and entertainment. Therefore, small companies should form alliances tomake the most of their strengths.
Dong said the Fourth Industrial Revolution ischanging the manufacturing industry and has a significant impact on howcompanies operate. Therefore, the shortest path for local firms to accelerateis by gaining access to advanced technologies to enhance their productivity andproduct qualities.
Looking to the future, the virtual and visualretailing model has been launched by local firms to get the quickest access toconsumers. Those firms are trying to introduce technological applications sothat consumers are able to approach their products and services in the fastestand most convenient way.
Starting August, Vietnamese retail companies arefinding ways to up their sales as consumers have high purchasing power in thefinal months of the year to prepare for year-end holidays.
FPT Retail and Mobile World Investment Corporation(Mobile World) – among the biggest retailers in the country – are exploring newsegments to reduce their dependence on digital and electronic sales.
In the first six months of 2019, FPT Retail earned158 billion VND in post-tax profit. The figure was not even close to half ofthe company’s full-year target, which was set at 418 billion VND.
After the first half of the year, Mobile World hasfulfilled about half of its full-year revenue and post-tax profit plans. Thefigures were 51.7 trillion VND and 2.12 trillion VND, up 16 percent and 38percent year on year.
Both firms have seen a decline in cellphone salesas the ongoing trade war between the US and China has dampened sales of Chineseproducts.
In the near future, cellphones will not be the keybusiness for those firms. The German market research institute GfK forecaststhe cellphone market is saturating with the sector growth being only 1-2percent this year.
In the long term, Mobile World will focus ondeveloping its consumer retail chain Bach Hoa Xanh with expectations that foodand beverage sales will be equal to that of electronics and cellphones in twoyears.
The grocery chain may reach its break-even pointin the fourth quarter of 2019, VNDirect Securities Corp (VNDS) said in a note.The expansion of the retail network will get faster than expected and thenumber of new stores will reach 700 at the end of the year.
VNDS estimates each Bach Hoa Xanh store willrecord 1.6 billion VND of sales each month. And by the end of the fourthquarter, the chain’s gross profit margin will be 20 percent thanks to increasesin sales of fresh food at the stores outside HCM City.
Meanwhile, FPT Retail has shift its attention topharmaceutical sector after it completed investing in the drug store chain LongChau. The company plans to build 470 drug stores in 2021 with total sales of 4.4trillion VND.-VNS/VNA
According to the market research firm Savills, theVietnamese retail market will be developing steadily by 2021 thanks toincreased demand for entertainment, modern shops and minimarkets, and appareland textile, which are forecast to grow at annual rates of between 6 percent and10 percent.
Vu Vinh Phu, Chairman of the Hanoi SupermarketAssociation, said multi-channel retailing will dominate the market in thefuture. The model combines shopping centres with other services such ascatering and entertainment. Therefore, small companies should form alliances tomake the most of their strengths.
Dong said the Fourth Industrial Revolution ischanging the manufacturing industry and has a significant impact on howcompanies operate. Therefore, the shortest path for local firms to accelerateis by gaining access to advanced technologies to enhance their productivity andproduct qualities.
Looking to the future, the virtual and visualretailing model has been launched by local firms to get the quickest access toconsumers. Those firms are trying to introduce technological applications sothat consumers are able to approach their products and services in the fastestand most convenient way.
Starting August, Vietnamese retail companies arefinding ways to up their sales as consumers have high purchasing power in thefinal months of the year to prepare for year-end holidays.
FPT Retail and Mobile World Investment Corporation(Mobile World) – among the biggest retailers in the country – are exploring newsegments to reduce their dependence on digital and electronic sales.
In the first six months of 2019, FPT Retail earned158 billion VND in post-tax profit. The figure was not even close to half ofthe company’s full-year target, which was set at 418 billion VND.
After the first half of the year, Mobile World hasfulfilled about half of its full-year revenue and post-tax profit plans. Thefigures were 51.7 trillion VND and 2.12 trillion VND, up 16 percent and 38percent year on year.
Both firms have seen a decline in cellphone salesas the ongoing trade war between the US and China has dampened sales of Chineseproducts.
In the near future, cellphones will not be the keybusiness for those firms. The German market research institute GfK forecaststhe cellphone market is saturating with the sector growth being only 1-2percent this year.
In the long term, Mobile World will focus ondeveloping its consumer retail chain Bach Hoa Xanh with expectations that foodand beverage sales will be equal to that of electronics and cellphones in twoyears.
The grocery chain may reach its break-even pointin the fourth quarter of 2019, VNDirect Securities Corp (VNDS) said in a note.The expansion of the retail network will get faster than expected and thenumber of new stores will reach 700 at the end of the year.
VNDS estimates each Bach Hoa Xanh store willrecord 1.6 billion VND of sales each month. And by the end of the fourthquarter, the chain’s gross profit margin will be 20 percent thanks to increasesin sales of fresh food at the stores outside HCM City.
Meanwhile, FPT Retail has shift its attention topharmaceutical sector after it completed investing in the drug store chain LongChau. The company plans to build 470 drug stores in 2021 with total sales of 4.4trillion VND.-VNS/VNA
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