Modern retail set to continue big boom in Vietnam

Modern retail set to continue big boom in Vietnam

The rapid growth of supermarkets, trade centers and e-commerce is expected to strengthen throughout Vietnam in 2010, said Dinh Thi My Loan, general secretary of Vietnam Retailers Association.

Vietnamese consumers are spending less on shopping than before, but that doesn’t mean they’re buying less stuff, she said. Many people still shop every day but they want it to be a more “convenient” and modern experience than they find at Vietnam’s traditional markets. Modern retail channels now account for only 20 percent of distribution in Vietnam, said Loan. The percentage is rather low, compared to that of 90 percent in Singapore, 60 percent in Malaysia, 51 percent in China, and 34 percent in Thailand. Consumers in Vietnam used to buy products from traditional markets, and small household shops or tiny stores. Loan said Vietnam’s two biggest cities, Hanoi and Ho Chi Minh City, had only one modern outlet for every 30,000 people, while there was room for one supermarket per 10,000 people and at least one large trade center for every 100,000. Meanwhile, market research firm Nielsen said the proportion of people who sometimes purchase goods at supermarkets had increased to 96 percent in 2008 from 66 percent in 2007, and the people using supermarkets as their main purchasing channel also rose to 21 percent from 11 percent. “With spending on consumption accounting for up to 70 percent of income coupled with consumer optimism in Vietnam, purchasing power is expected to continue to surge in coming years,” said Loan. The local retail industry aims to increase its total sales by 20 percent this year, said experts at a conference in Hanoi late last week. They said the domestic retail market remained very attractive for investors as retail sales in the country were recorded at nearly VND1,200 trillion (US$65 billion) last year, up 18.6 percent from 2008. Richard Leech, director of real estate and research firm CB Richard Ellis Vietnam, said demand for retail space is expected to rise as Vietnamese retail chains expand and more international brands arrive in the country. In Hanoi, the supply of retail space is expected to surge to 510,000 square meters, five times its current figure. Loan said that in the future, traditional retailers would have to improve the quality of their services while investors should not ignore potentiality in rural areas, where over 70 percent of all Vietnamese people still live. Reported by Ngan Anh