With a population of 90 million people, Vietnam has a strong retail market with very high potential for local and foreign retail giants to pour in investments.
The Association of Vietnam Retailers believes that a modern style of retailing plays a key role in the development of the nation’s consumer market.
Currently, the country has around 750 supermarkets, 130 shopping centers and approximately 9,000 traditional markets.
Six years after joining the World Trade Organization (WTO), Vietnam’s retail market has become far more modern.
The growth of local retail outlets like Co.opMart, Maximark, Citimart, Vinatext-Mart has lured foreign retail giants such as Metro Cash and Carry, Big C, Parkson, Diamond Plaza, Lotte, Circle K, Zen Plaza and Family Mart.
Wholesale and retail markets have so far contributed largely to the country’s economy with 15.5 percent of Vietnam's gross domestic product. Foreign Direct Investment (FDI) projects in the retail sector are continuing to grow. According to the Association of Vietnam Retailers, in the first nine months of the year, around 168 new FDI projects have been registered with total investment around US$380 million.
Accordingly, labor in wholesale and retail sector also increased with more than 5.5 million people.
Vietnam is seen as a market with tremendous potential for retail growth as most of its population can be considered part of the younger generation, a group with significant purchasing power, with 70 percent of consumers’ shopping through retail market channels.
Although the modern style of retailing via markets and trade centers has seen strong growth, it is still lower than counterparts in other Asian countries. At present this type of retailing accounts for only 22 percent, while it is 33 percent in the Philippines, 34 percent in Thailand, 60 percent in Malaysia, and 90 percent in Singapore.
Explosive growth of modern retail market channels has led to fierce competition between modern and traditional retail channels in the country. Despite modern retail channels expanding drastically, traditional retail markets in Vietnam have still survived.
Dinh Thi My Loan, General Secretary of the Association of Vietnam Retailers, said modern style of retailing accounts for only 22 percent while 78 percent still belongs to the traditional retail market.
About 70 percent of Vietnamese people live in rural countryside areas, therefore, however strongly modern retail channels develop; they will never overshadow the traditional retail market. Nevertheless, traditional retail markets have to improve their quality under strong pressure of competition.
According to the Ministry of Industry and Trade, by 2020 the nation will have around 1,200-1,300 supermarkets, 180 commercial centers and 157 shopping centers. This shows that the country’s retail market will remain very attractive for both local and foreign retail giants.