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Local retailers urged to raise competitiveness
The Saigon Times Daily
Monday,  Jun 25, 2018,14:49 (GMT+7)

Local retailers urged to raise competitiveness

The Saigon Times Daily

A staffer arranges goods at a Co.opMart supermarket in HCMC. Local retailers are urged to raise their competitiveness - PHOTO: THANH HOA

HCMC - The penetration of large international retail firms into the Vietnamese market and the rising popularity of online shopping sites such as Shopee, Sen Do and Lazada have forced local retailers to make full use of their home-ground advantages to raise their competitiveness, according to news site Vietnamplus.

Vietnam is an attractive market for investors in the retail sector, but given the intense competition, experts suggest that local retailers with a better understanding of customer habits and the local market should raise quality standards and map out detailed and effective competition strategies.

According to a survey on the retail sector in 30 developing countries worldwide, conducted by consulting firm A.T. Kearney, Vietnam is one of the most attractive retail markets in Southeast Asia and ranks sixth in the 2017 global retail development index.

Statistics from the Ministry of Industry and Trade shows the total consumer goods and service retail revenue in 2011-2017 grew by 10% annually to more than VND3,200 trillion (US$140 billion) last year. In the first five months of the year, the total retail sales amounted to over VND1,750 trillion, up 10% year-on-year.

Foreign retail giants have entered Vietnam, making the competition in the domestic market more fierce.

For instance, Japan’s Family Mart has launched 30 stores in Vietnam and will open an additional 700 stores in the country by 2020. Meanwhile, 7-Eleven, which entered the Vietnamese market in June last year, has plans to open 100 stores in Vietnam  in the next three years and to raise the number to 1,000 in the next 10 years.

The first South Korea-based GS25 convenience store was also launched in the city late last year, paving the way for the giant to open 2,500 others in the next ten years. In addition, Japan’s Takashimaya is scheduled to open a 15,000-square-meter shopping mall in HCMC.

However, some large foreign retailers have reported losses. They explained that they need five to eight years to break even. Due to the current fierce competition, they have to spend more on locations, promotional programs, advertising and services to attract customers.

According to a study by CBRE Vietnam involving 1,000 consumers in HCMC and Hanoi, 25% of respondents said they would reduce their shopping at brick-and-mortar stores, while 45-50% of others would shop online more frequently.

Troy Griffiths, deputy managing director of Savills Vietnam, noted that Vietnam’s retail sector is growing strongly, with numerous new products being launched and the mushrooming of commercial centers. In the future, new retail models will be launched to better serve consumers.

Moreover, traditional retailers have cooperated with ecommerce platforms to adapt to new trends. They are eyeing potential rural areas as well.

The country currently has more than 8,500 markets, 957 supermarkets and 189 commercial centers. The supermarkets and commercial centers are mainly located in large cities.

According to market research firm Nielsen, the fast-moving consumer goods sales in urban areas grew 5% last year, while the market has remained underdeveloped in rural areas.

Vu Vinh Phu, a trade expert, stated that Vietnam is an attractive retail market in Asia, with an annual growth rate of 89%. The country also has some 4,000 convenience stores and online shopping sites, with an annual growth rate of 10%.

Dinh Thi My Loan, chairwoman of the Vietnam Retailers Association, pointed out that Vietnamese consumers are wont to shop at traditional markets but the number of those preferring supermarkets is also high. Therefore, Vietnamese enterprises should develop convenience stores in rural areas to meet the demand of consumers there, she added.

Vingroup has launched 1,500 VinMart+ convenience stores in 30 cities and provinces nationwide within two years. Saigon Co.op has also turned traditional grocery stores into Co.op Smile retail outlets in residential areas.

In the rural areas of the northern region, 19 Viet Lan Chi Mart stores have been put into service. Hanoi Trade Corporation (Hapro) has also opened Hapromart convenience stores in Thai Binh, Quang Ninh and Thanh Hoa provinces.

Tuoi Mart Trading Co., Ltd, has opened mini supermarkets inside office buildings in HCMC’s outlying areas and in Tay Ninh and Long An provinces.

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