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Investors will keep injecting money in retail
Vietnam’s retail market remains very attractive in the eyes of foreign investors, even though Vietnam’s GRDI (The global retail development index) in 2010 fell by eight grades in comparison with 2009.
According to the latest GRDI report released by AT Kearney, Vietnam is the 14th most attractive retail market in the world, a fall of eight grades from the 2009’s ranking. Four years after Vietnam officially joined the World Trade Organization (WTO) and two years after it officially opened the retail market, world’s largest retailers are still absent in Vietnam. This made somequestion whether Vietnam’s market is still attractive to foreign retailers.
However, the answer is that Vietnam remains very attractive to foreign investors and that the investment will increase in the time to come.
Richard Leech, Managing Director of CBRE Vietnam, said that though Vietnam had fallen by eight grades in GRDI, the market still saw seven new retailers joining last year, and it still witnessed the highest growth rate in Asia Pacific. Meanwhile, people’s spending has been increasing steadily, now accounting for 70 percent of total income. The retail turnover in Vietnam in 2010 was $77.8 billion, while the figure is expected to reach $85 billion by 2012.
Rob Rijnders, Deputy President of Unilever Vietnam, said that with the young population and the expected number of 20 million of people who would have better living standards by 2020, Unilever still can see the opportunities to develop its products in the future.
However, it is true that four years after Vietnam officially joined WTO, the world’s biggest retailers have not come to Vietnam, and the competition between domestic and foreign retailers is still not as as previously expected. Explaining this, Phan The Rue, Chair of the Vietnam Retailers’ Association, said that it is partly because Vietnam began opening its market at the time when the world was facing global crisis. Besides, foreign enterprises need to conduct surveys on the consumption culture and the profitability of the market before making their investment decisions.
“That explains why foreign retailers still have not flocked to Vietnam yet,” Rue said.
However, he believes that in 2011, with the economic recovery, Vietnam’s retail market will be very bustling.
The statistics released by the Vietnam Retailers’ Association showed that to date, only 26 retail points of foreign retail groups have been set up in Vietnam, accounting for 15 percent of the market share. It is noteworthy that though the foreign retail points have not been set up in large numbers, foreign retailers have been quietly establishing more and more retail points over the last two years. Despite the modest number of retail points, the turnover of foreign supermarkets is very big, equal to that of 30-40 of supermarkets in Vietnam. This shows the strong competitiveness of foreign retailers, especially when they can get the retail premises in advantageous locations.
Vietnamese retailers, including Co-op Mart, Hapro, Phu Thai, Nguyen Kim or Tran Anh, have been growing well over the last few years. However, with the the limited financial capability, it is difficult for the domestic enterprises to access good retail premises. Especially, domestic retailers lack long term development strategies. They are also inexperienced in corporate governance and have poor infrastructure.
Vu Thi Hau, Deputy Director of Nhat Nam Company, the owner of Fivimart chain, said that a lot of applications for opening supermarkets by both domestic and foreign retailers have been submitted to the Ministry of Industry and Trade. Therefore, Hau anticipated that the competition among retailers would be very stiff in the time to come. Especially, foreign retailers, with their strong financial capability, can accept making losses for 10 years in order to set up a new retail point.
The Vietnam Retailers’ Association has forecast some retail trends for the time to come. in big urban areas big supermarkets will develop most strongly in 2011 and 2012 before slowing down in the next years. convenience stores and supermarkets specialized in food and foodstuff, specialized shops (Clothes, footwear, household goods and electronics) will increase rapidly. Meanwhile, at high grade shopping centers, shopping would be associated with entertainment. the retail market in rural areas is also believed to prosper in the next years.
vietnamnet
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