Opportunities in retailing in Vietnam

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The entrance of Giant (a brand under Dairy Farm Group from Hong Kong) by opening its first supermarket in HCMC on Dec 21st, 2011 marked the appearance of more than 15 retailers in Vietnam, amongst which prominent players are Wal-Mart, Carrefour, Tesco, Circle K, Metro Cash & Carry, Daiso, E-Mart, Guardian. The foreign retailers bring in marketing, IT system, experience in managing supplier, lean business operation and strong capital however it is not always a guarantee for success. Examples from other markets showed that Carrefour (France) was outcompeted by local brands in Chile. Wal-Mart (US) was successful in Mexico, Canada, UK but failed in Germany and South Korea.

Vietnam retailers are also seen to expand swiftly to take up good locations and reach closer to its customers. With its latest opening on Dec 31st in Vinh Phuc, Co.opMart now has 55 supermart and 30 Co.opFood stores. Vinatextmart has opened 62 supermarkets across the country. FamilyMart (in collaboration with Phu Thai Group) has opened about 16 convenience stores in HCMC. The largest chain of convenience stores in HCMC is now Shop & Go with 68 stores opening 24/24.

Large population with increasing demand, but the sales have not been met, so the supermarkets have grown continuously from 30 to over 50% per year since 1993. The fact is that even in the period with many economic difficulties, the modern retail channels (supermarkets, shopping centers, convenience stores) have very strong growth opportunities. Specifically Co.opMart system, Vinatextmart, Maximark, Citimart still achieved growth rates above 30% in 2011, according to Saigon Media Marketing

At the current, Vietnam retailers have fought strongly to hold on to its share. With the current legal framework that limit the free entrance of foreign retailers, Vietnam retailers still have time to build up its capacity. Further, local retailers would have the benefit of operating in Vietnam long enough to understand its customer better and come up with proper marketing strategies that can improve its competitive edge. However, with the increasing competition from foreigner retailers, local players should think of consolidation and pool in resources to invest in improving its technology, logistics, and training to fill in the gap.

At current, it appears that no single retailers reach dominant market. Nearly a hundred modern retailers accounted for 20% retail market share nationwide. The supermarkets only exist in a few large cities; many cities in Vietnam are still lack of supermarket chains or convenience stores. Market is still large enough for growth and the competition has just started.

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