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Good performance encourages retailers
Retail sales continue to grow strongly while new distributors are eager to join the market in Vietnam.
Market research shows that Vietnam’s retail turnover rose by 18.6% last year, an encouraging improvement as many retail markets in the world recorded negative growth. According to the Vietnam Retail Association, retail revenues recorded almost VND1,200 trillion (US$64.8 billion) in 2009 and are expected to reach VND1,440 trillion (US$77.8 billion) this year.
The figures are of great significance as the world’s major markets, including the U.S., Japan, South Korea and the European Union, saw minus growth rates.
This is why many local and foreign distributors have unveiled plans to expand distribution networks to many cities and provinces throughout the country. Meanwhile, many new foreign retailers want to join the market in Vietnam.
Japanese giant Family Mart Group recently chose Vietnam to open a convenience store chain operating around the clock via a franchise for Phu Tai Company. Late last month, the first Family Mart was inaugurated in HCMC’s District 1 with diversified products and goods. Phu Tai will open four more pilot shops in HCMC.
Family Mart Group has franchises in many nations and territories such as China, Taiwan, Thailand, Korea and the U.S. Established in 1981, Family Mart Group has launched over 15,000 stores worldwide.
South Korea’s leading department store operator, Lotte Shopping, is waiting on an investment certificate to open a shopping center in HCMC after opening one in Saigon South new urban area in District 7 in late 2008.
Lotte Vietnam Shopping Company, a unit of Lotte Shopping, has acquired the commercial area on the first five floors of The EverRich apartment building at the corner of Ba Thang Hai and Le Dai Hanh streets in District 11 to open its second shopping center in Vietnam. The 23,000 square-meter Lotte Shopping Center in District 11 is a US$100-million venture between Lotte Shopping and Vietnam’s Minh Van Company.
The joint venture has launched a soft opening for the new shopping center on the occasion of the Lunar New Year.
Lotte plans to set up about 30 department stores and supermarkets in HCMC, Hanoi, Danang, Can Tho, Haiphong and Hue over the next ten years at a cost of some US$5 billion. They will include 15 department stores and supermarkets in HCMC and in neighboring provinces.
Representatives of foreign distribution and retail firms, including Parkson and Big C, praised the opportunities in Vietnam, especially since the country opened its retail market as part of its commitments to the World Trade Organization (WTO) early last year.
Malaysia’s leading retailer group Parkson Corporation said at the opening of its new Parkson Shopping Complex in HCMC last month that its business in Vietnam had recorded the highest growth among markets worldwide where it is present, so it plans to expand its investment in the country.
Tham Tuck Choy, General Director of Parkson Vietnam, said, “Parkson has actually gained double-digit growth since its entry into Vietnam in 2005.” Growth in Vietnam in 2009 was some 30%, while in China it was 10% and in Malaysia 10-15%, he said at the opening ceremony for the Parkson Flemington, the fourth Parkson outlet in the city and the sixth nationwide.
Choy said business was higher in Hanoi, at some 40%, and that his company would open two new shopping centers in the capital in 2010. The company is also expected to open the first Parkson Center in the central city of Danang this year or next.
Parkson had planned to operate ten retail stores in major cities like Hanoi, HCMC, Danang, Haiphong and Vung Tau by 2010, but Choy admitted that the plan could not be realized since “it is very difficult to find locations for new shopping centers in big cities like HCMC and Hanoi.”
European retail group Casino and its partner last month inaugurated a new Big C supermarket in Hanoi, its second outlet in the capital and tenth in the country. The store is in the first basement of The Garden Commercial Center belonging to The Manor Me Tri hi-end apartment project in Tu Liem District. The 3,700-square-meter Big C supermarket in northern Vietnam is under a US$3-million project run by a venture between Casino and Hanoi-based GTC.
Casino was the first foreign retail company licensed in Vietnam. After 12 years of operation, it has ten supermarkets in the country including four in HCMC, two in Hanoi, one in Haiphong, one in Danang, one in Hue and one in Dong Nai. The company targets to build more supermarkets and hypermarkets if the existing ones run well.
Leading chain operator Saigon Co.op has just opened two new outlets, one in the central city of Danang and one in Bien Hoa City in the southern province of Dong Nai, bringing to 44 the number of outlets nationwide.
Nguyen Thi Hanh, general director of Saigon Co.op, said the company would open ten or twelve more supermarkets around the country by the end of the year.
Saigon Co.op targets to increase the number of its Co.op Mart stores to 100 by 2015, enabling it to compete with international retailers.
The Association of Vietnamese Retailers (AVR) says Vietnam’s high and stable GDP growth and its young consumer population are important factors behind the success of the domestic retail sector. As much as 57% of the country’s population is now under the age of 30. This figure is predicted to drop to 50% in the next 15 years.
As a result, spending is likely to rise above the current 70% of total income.
It is estimated that Vietnam’s total retail revenues will hit US$85 billion by 2012.
The AVR says the modern style of retailing via hypermarkets and trade centers will prevail in the future. This type of retailing accounts for only 18-20% of the sector compared with 34% in Thailand, 60% in Malaysia and 90% in Singapore.
Selling in local markets or traditional retail shops, the AVR says, will remain a major mode until 2015.
VietNamNet, SGT
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