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Supermarket boom for southern Vietnam
Supermarkets are springing up in Ho Chi Minh City and other southern areas as domestic and foreign retailers battle for a larger slice of the growing retail market.
The domestic retail market has continued to grow despite the global downturn, Vietnam News Agency reported last month, citing the Association of Vietnam Retailers.
Total revenue from the sale of retail goods and services in the first quarter of this year reached VND270 trillion (US$15.18 billion), a year-on-year increase of 22 percent, according to the General Statistics Office. The sector is forecast to continue growing at about 20 percent a year.
The value of domestic trade in the first quarter accounted for more than 15 percent of the country’s gross domestic product.
In 2008, Vietnam’s retail sales was estimated at VND 970 trillion ($54.6 billion).
Competition for a share of the retail sector has been heating up among domestic and foreign retailers since 2007 when Vietnam first allowed foreign businesses to form retail joint distribution ventures with domestic companies.
Vietnam’s retail market opened further in January this year when foreign distributors were allowed to establish 100 percent foreign-owned companies.
With more capital and experience than domestic retailers, foreign firms have their sights set on dominating Vietnam’s retail sector.
Lotte Vietnam Shopping Co., a joint venture between South Korea’s department store operator Lotte Shopping and Vietnam’s Minh Van Company, plans to open a second supermarket in Ho Chi Minh City.
The company opened the S$75 million Lotte Mart in HCMC’s District 7 in December last year.
French supermarket chain Big C is also preparing to open its ninth supermarket in central Hue City in July with a total investment capital of $17 million.
Under threat from foreign rivals, domestic supermarket chains are rushing to upgrade their distribution systems.
Nguyen Thi Tranh, deputy general director of Saigon Co.op, the largest retail chain in southern Vietnam, said Saigon Co.op planned to open 12 supermarkets across the country this year.
A $3.43 million supermarket was opened Tuesday by the domestic chain in southern Binh Phuoc Province. Another new Co.op supermarket will open in southern Ba Ria-Vung Tau Province on May 22.
Domestic retail chain, Citimart, which has opened four new supermarkets since late 2008, is preparing to open 10 more.
Domestic supermarket operators are also joining forces to better compete with their foreign rivals.
Nguyen Thi Hong Huong, director of state-owned retailer Vinatexmart, said the chain had agreed to cooperate with Saigon Co.op in searching for premises for new outlets.
Vinatextmart would help Saigon Co.op develop its clothing product segment and Saigon Co.op would, in return, share its experience in managing groceries, Huong said.
“If the two sides can find a common voice to guarantee each other’s interests, this type of cooperation will be a weapon for the businesses to compete against their foreign rivals in future,” she said.
Hong Nguyen
vietnews
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