Independent global retail specialists gave the bright forecast for the retail sector in Viet Nam at a seminar on the topic last Wednesday in HCM City.
The retail sector is growing by leaps and bounds, with some of the region’s, and the world’s largest retailers already setting up shops in Viet Nam, the seminar heard.
Terry Ghani, director of Malaysia’s TGA Company said Viet Nam was proving to be a potentially lucrative market for retail trading activities.
"Viet Nam has stable politics, with over half its population under 30 years of age. These kinds of conditions signal a great opportunity for developing and maintaining a profitable retail market in the country," said Ghani.
With its close proximity to major Asian markets like India and China, as well as smaller regional markets like Cambodia and Laos, Viet Nam is well situated to attract global retail start-up, he said.
Foreign retailers are looking to Viet Nam as a way to penetrate the bigger Asian markets after they gain a firm foothold in the Vietnamese market, he explained.
Vu Kim Hanh, director of the HCM City Investment and Trade Promotion Centre concurred with Ghani, saying consumers who spend VND500,000 (US$32) or more per month are between 22 to 55 years of age, which covers 70.29 per cent of Viet Nam’s population.
"Local incomes are increasing and shopping styles are shifting from the traditional mode of shopping at outdoor markets, to shopping at supermarkets and department stores," Hanh said.
Most importantly, 90 per cent of domestic retail sales still belong to neighbourhood markets, an official from the Ministry of Trade said, underlining the paramount opportunity of getting into the country during the transition phase.
The country’s first supermarket [Sai Gon Co-opMart] opened in HCM City in 1994, with the number of supermarkets in the country growing to nearly 90. Although these stores have continuously achieved an average growth rate of over 20 per cent a year, their turnover has accounted for only 10 per cent of the country’s total retail sales, the ministry official said.
A representative of CB Richard Ellis (CBRE), a US-based company specialising in property consulting and management said reasonable rental rates are another attractive aspect of the Vietnamese retail market.
Rental rates at Viet Nam’s trade centres average $30 per square metre a month, much lower than those in countries and territories like mainland China, Hong Kong, Singapore, Taiwan and Thailand, the representative said.
Statistics show the time is now for domestic and foreign supermarket chains to seize the opportunity to fully tap the lucrative Vietnamese market to expand market share and increase profit.
Sai Gon Co-opMart and Maximart chains – now the country’s biggest domestic supermarket systems – are present in almost all major cities and provinces across the country.
Nguyen Ngoc Hoa, director general of Sai Gon Co-op Supermarket, the biggest supermarket retailer in Viet Nam, said its stores utilise unique business techniques to manage a turnover totalling VND1.56 trillion in 2004, up by 49.5 per cent over 2003.
The number of Co-op stores is estimated to increase to 40 by 2010, Hoa said.
Meanwhile, many major retail centres such as Diamond Plaza, An Dong Plaza and Zen Plaza have opened their doors and have profited within Viet Nam’s market.
Since 2000, several global retailers have made the scene in Viet Nam, including heavyweights the Bourbon Group, Metro Cash&Carry, Lotteria, Medicare, and Parkson.
Metro Cash&Carry was the first foreign company licensed to open a wholesale centre in Viet Nam, and now operates two supermarkets in HCM City and one in both Ha Noi and Can Tho.
The company has just opened its sixth store in Da Nang and started construction of a supermarket in the port city of Hai Phong. The German retailer has plans for two more stores, one more for Ha Noi, and another for HCM City.
French retailer Bourbon began operations in Ha Noi in late 2004 with the Big C super store and is to invest $120 million in building a supermarket network extending to, Can Tho, Da Nang and HCM City.
A source from the Ministry of Planning and Investment also said that Singapore’s Giant South Asia Investment Pte Ltd has approached the Government for a 10-year license to build a supermarket chain dedicated to the sale of domestically produced goods.
Tesco, a robust newcomer from the UK, is also seeking opportunities to penetrate the increasingly competitive market.
Although the US’s Wal-Mart and France’s Carrefour have yet to hold meetings to discuss investment and business opportunities, they have put Viet Nam on their list of key future markets.
While many foreign retailers are preparing to set up shops in Viet Nam to cash in on the lucrative market, the price crunch that would benefit consumers will create fierce competition for Vietnamese businesses, according to trade experts.

Source: Vietnam News, 20/12/2005.