Strong economic growth, rising incomes and retail sales increasing at the fastest rate in four years are attracting overseas retailers to Vietnam.
Latest figures from the country’s General Statistics Office indicate that the economy grew 7.02% in 2019, with retail sales of goods and services 11.8% up to reach VND4,940 trillion (US$214.8 billion).
Monthly income per capita, meanwhile, was estimated at VND4.2 million ($182) in 2019, higher than the VND3.9 million ($168) registered in 2018, Vietnam Plus reported.
Nam Dinh Province in northern Vietnam experienced the highest increase in purchasing power in the country, with a growth rate of 18%.
Figures like these are enticing for overseas retailers looking to expand into new markets – and especially for South Korean ones facing domestic problems as the population ages and more one-person households prefer to shop online.
Korean supermarket giants such as Lotte Shopping and E-Mart already have a presence in Vietnam and plan to expand that further in the year ahead, but success may be difficult to achieve.
“Although Vietnam’s retail sector holds immense potential for growth, the level of competition is intense,” according to Nguyen Vu Duc, consumer industry leader at Deloitte Vietnam.
“Across different retail formats ... we are witnessing domestic and foreign retail giants engaged in a battle for dominance as they embark on aggressive expansion strategies,” he told the Nikkei Asian Review.
Korean retailers face a stiff challenge from Vietnamese businesses – last month, for example, Vingroup and Masan Group announced they were merging their retail and consumer goods manufacturing businesses to create the country’s largest retail company.
In addition, Vingroup controls 60% of commercial centre floor space in the two major cities of Hanoi and Ho Chi Minh City.
Japanese retailers are also moving into Vietnam and convenience stores originating from there are highly regarded by Vietnamese consumers.
And fashion retailer Uniqlo recently opened its first store in the country, with Tadashi Yanai, chairman and CEO of Fast Retailing, the brand’s operator, declaring: “Vietnam is a land of promise.”
Sourced from Vietnam Plus, Nikkei Asian Review; additional content by WARC staff