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Retailers on defensive as market opens
As wholly foreign-owned retailers prepare to enter the market next year, local retailers are figuring out how they can keep their share of the pie, a conference in Hanoi was told on July 30.
The pie is one that keeps getting bigger, as retail sales in the country totalled around 27.3 billion USD during the first six months of this year and are anticipated to climb to 50 billion USD by 2010, the deputy chairwoman and general secretary of the Association of Vietnamese Retailers (AVR), Dinh Thi My Loan said.
Loan made the statement during the conference, entitled Opportunities and Challenges in Vietnam ’s Retail Market held by the Ministry of Industry and Trade and AVR.
At the seminar, many market-research companies released positive figures, hoping to seduce foreign retailers.
According to one survey released by AT Kearney in 2007, Vietnam ’s retail market ranks fourth in the world after India , Russia and China , amounting to an astounding 37 billion USD per year. The company’s potential is further reinforced by the large percentage of young people in its population of 85 million.
In 2002, 33 percent of the population earned less than 2 million VND (121.2 USD) per month and 6 percent earned over 10 million VND (606 USD), according to AC Nielsen, a market-research company. Next year, it is forecast that just 2 percent of population would earn less than 2 million VND and 12 percent would earn over 10 million VND.
Taylor Nelson Sofres Co, a company specialising in researching, surveying and evaluating markets, said that Vietnam was a potentially attractive market for hi-tech electronics equipment in Asia .
The figures were good news to local retailers attending the conference.
Local retailers will have to accept competition not only in Vietnam but from the world, where foreign companies will take as much of the market as they can, Loan said.
“According to the WTO commitments, Vietnam must open for all wholly foreign-invested retailers. Thus, it is necessary for policy makers to issue laws relating to retail, including laws on product quality, food safety and hygiene and consumer protection,” said Phu Quoc Si, a manager at Big C super-market.
AVR is drawing up a decree on retail to submit to the Ministry of Industry and Trade that will come into effect in 2009 when wholly foreign-owned retailers will gain access to the market.
The decree hopes to satisfy the pressing requests of the local retail community on mutual rules, and against the misuse of powerful brand names. At present, retail sales via supermarkets account for only 10 percent of sales, with the remaining distributed among traditional markets, small shops and direct sellers.
Consumption habits of Vietnamese residents, especially youth, are changing. Vietnamese increasingly prefer to shop at modern supermarkets with better quality and service.
It is hoped that by 2017, retail sales from supermarkets in Vietnam will account for 60 percent of sales, equal to the current levels in Thailand.
VNA
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