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Local retailers on the clock
Domestic retailers still have enough time to brace themselves for the fierce competition from foreign counterparts who are not likely to enter the market before 2012, a conference in Ho Chi Minh City heard last week.
Vietnam’s retail market has been fully-opened for foreign retail groups since the beginning of this year as part of the country’s commitment to the World Trade Organization.
John Yeomans, director of consulting firm Deloitte Consulting South East Asia in Vietnam, explained multinational retail giants were slow to explore the market because of the global economic downturn.
“I learnt that some two major international retailers were interested in Vietnam but they were forced to delay their investment plans due to the global downturn,” he said in an interview with Thoi bao Kinh te Sai Gon (Saigon Economics Times).
Yeomans added that despite the WTO commitment, Vietnam’s current red tape is still blocking foreign retailers paving their way into the country.
The market is still hobbled by a low average income, according to Dr. Dinh Thi My Loan, general secretary of the Vietnam Retailers Association (VRA).
“They will wait until the market gets bigger (before) they step in,” she said.
VRA chairman Phan The Rue said at the conference Vietnam would not see a flood of foreign retailers into the country as international firms still cooperate with Vietnamese partners.
It would take them several years to negotiate with local partners and the global economic crisis would also hinder their new investment plans in any market, Rue said.
“If the global economy rebounds in 2010, I think foreign retailers will enter Vietnam after two years, which is around 2012,” he said.
Not a single new foreign retailer has been licensed in Vietnam this year. The market only saw the expansion of local and foreign retail groups which had earlier been licensed in the country, such as France’s Big C supermarket chain, Malaysia’s Parkson department store chain and South Korea’s Lotte retail group.
Vietnam currently has more than 1,000 convenience stores, 250 supermarkets and trade centers compared to more than 9,000 traditional markets and about 250,000 retail venues of other types.
The country was named the sixth most attractive emerging market destination for retail investment in the world this year by management consulting firm A.T. Kearney.
Retail sales in Vietnam have been enjoying steady growth over the past four years, from around US$23.7 billion in 2005 to $39 billion last year, U.S. market research firm RNCOS said in its Vietnam Retail Analysis Study for 2008-2012 report released in July, according to the Sai Gon Tiep Thi (Sai Gon Marketing) newspaper.
Vietnam’s retail sales and service revenue in the first nine month of this year rose 18.6 percent year-on-year to VND845.4 trillion ($47.39 billion), according to the General Statistics Office.
RNCOS forecast the retail market would generate $85 billion in revenue in 2012.
Hong Nguyen
vietnews
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