It is easy to see that 2015 was a very active
year of Vietnam’s retail market, especially in merger and acquisition
(M&A), association and joint venture activities… both in manufacturing
and trading of retail
businesses such as Kinh Do, Citimart, Metro and Nguyen Kim.
According to Euromonitor International – a
market research firm, the retail sales in Asia – Pacific was about 4,000
billion USD in 2012 then the top 500 leading retailers accounted for 1,000
billion USD, representing for 24% of total sales. Vietnam retail market is
considered attractive and high potential despite the world economy remains
difficult.
In 2014, most of the domestic businesses tend
to cluster and maintaining position, except some large enterprises like
Co.opmart and Saigon Trading Corp (Satra). Even a few enterprises withdrew
locations like Fivimart withdrew all locations in the South or Intimex, Hapro
also withdrew some locations in the North. This was intended to reinforce the
quality of the business and rebranding. Excepting for Satra
and Co.opmart still have more new locations this year. Currently, Saigon
Co.opmart has presented on 71 locations including 29 supermarkets in Ho Chi
Minh City (HCMC) and expanded to 42 nationwide supermarkets, along with around
100 Co-op Food convenience stores.
According to the experts, the retail market of
Vietnam is shifting from the model of mature market to postmodern market. The
market is gradually concentrated and the number of companies decreased. Some
large retailers failed, saturated real estate market. The model of hype
supercenters dominates the retail industry in the postmodern period. At the end
of the growth period will be an important change in the retail market for both retailers and
suppliers.
Retailers seek future growth because there is
no retail channel dominates the growth. Part of the development of hypermarkets
in the mature phase will focus on the discount channel. According to the trend,
the discount channel continues to grow in the postmodern period. Currently and
in the coming time, retailers will frequently launch discount programs and
deals to attract customers.
The factors that impact the globaldistribution market are the speed of
technological change, change in demographics, buying behavior requires lasting
communication connection and knowledge-based purchases. Therefore, retailers
must take care of customers regularly with the best service.
As for foreign companies, except Walmart
corporation (USA) is in the exploratory stage, most of the major corporations
in the world have joined the Vietnam retail market such as Lotte, Big C, Metro,
Parkson , Aeon… Foreign enterprises are entering Vietnam market by many
different ways: joint venture, association, cooperative transfer location.
Vietnam retail market is very potential.
Currently, Vietnam has more than 90 million people, in which the young
population accounts for more than half. The average GDP of this country is
approximately 2,000 USD / person. In the future, this figure will increase and
that will be a prerequisite for the development of Vietnam retail industry,
especially modern retail. According to statistics of the Ministry of Industry
and Trade, the market share of modern retail in Vietnam makes up only 25% of
total retail sales. The whole country has about 724 supermarkets and 132
shopping centers. Moreover, the number of truly convenience store, which is
branded and operated in store chain, is just hundreds stores. Most supermarkets
and shopping centers concentrated in major cities and urban areas. In rural
areas and suburbs, they are virtually absent from the retail system, they are
major distribute in installments. Therefore, the market share of modern retail
market of Vietnam is still quite a lot.
However, this market will have fierce
competition between domestic and foreign enterprises. Foreign investors are not
only penetrating into Vietnam by the ways of joint ventures in the distribution
chain right from production process. For example, C.P Company, which is belong
to C.P Group (Thailand) is accounting for 50% market share of eggs, 30% market
share of chicken, 7% market share of animal feed in Vietnam. Hence, foreign
companies are holding a supply chain from production to distribution. Besides,
foreign companies are mostly big enterprises that have advantages in capital
and experiences. They have good strategies and that will be the biggest
challenges for domestic businesses on the path to affirm its position.
2015 and the coming years, Vietnam retail
market will continue to be active and witnessing fierce competition among
enterprises, particularly between foreign and domestic firms. We will continue
to witness the landing of foreign enterprises in Vietnam market such as: Aeon
Japan with the Aeon Mall Him Lam project in Sai Dong, Long Bien; the Lotte
Group plans to open 60 locations (now have 9 locations). The domestic
businesses are making plans to expand the distribution points not only in the
city center but also the suburban areas such as Citimart has extended an
additional 70 locations with scale from 1,000 to 2,000 m2 / location in the
coming time…
2015 is also a year full of opportunities and
challenges for the retail sector of Vietnam. From the date of November 1st 2015, Vietnam allows the establishment of 100% foreign
investment capital retail companies under Vietnam’s commitments upon WTO
accession. Besides, 2015 is year that ASEAN economic community (AEC) has
officially been established, which allows the flows of resources, goods and
human capital… to be freely moving in the area. Moreover, the TPP agreement
with 12 participating countries that was signed in 2015. With this agreement,
more than 10,000 kinds of goods from the member countries will be completely
tariff eliminated. This will cause many difficulties and disadvantages for
domestic goods but it is also the motivation for the production and
distribution, enhance the competitiveness of enterprises in Vietnam.
According to the survey, the majority of
retail brands that selected Vietnam in 2015 on par with Hong Kong, Singapore,
even higher than Indonesia and Malaysia. Three big cities that are Hanoi, Ho
Chi Minh City and Da Nang belong to the top 10 of the most vibrant retail
markets in Asia – Pacific region due to its large and young population,
after-tax income growth rapidly, quality retail networks that can attract
multinational enterprises.
Vietnam currently has about 8,546 markets, 1
million small shops, 724 supermarkets, 132 trade centers and more than 400
convenience stores. Currently, the rural market with nearly 70% of the
population but almost completely overlooked. As planned by 2020, Vietnam would
grow up to 1,200 – 1,300 supermarket, 180 trade centers and 157 shopping
centers. This suggests that the Vietnam retail market is very attractive for
manufacturers, businesses and retailers to penetrate.
Further
information
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