"Opening is expected to create more favourable conditions and to boost the business development of local retailers; however, it also brings a number of challenges," said Deputy Minister of Industry and Trade Nguyen Thanh Bien in a conference in Ha Noi yesterday.

According to the WTO commitments, Viet Nam must open to all wholly foreign-invested retailers in 2009. Many well-known companies such as Metro Cash&Carry, Casino, Big C Bourbon, Parkson and Wal-Mart have entered the local market already. Some representatives warned that most Vietnamese retailers are small amateurs and cannot possibly control the market.

To turn challenges into opportunities, the Ministry of Industry and Trade called on local retailers to improve competitiveness, draft out long term strategic investment plans and develop risk provision strategies.

It is necessary for policy makers to issue laws relating to retailing, including laws on product quality, food safety and hygiene and consumer protection.

The Association of Vietnamese Retailers (AVR) is reportedly drawing up a decree on retailing to submit to the Ministry of Industry and Trade that will come into effect in 2009.

The decree hopes to satisfy the pressing requests of the local retail community on mutual rules for protection against the misuse of powerful brand names.

Broaden business

Acquisitions and mergers among local retailers are recommended to help them broaden their business scale for firmer positioning.

In addition, domestic retailers should re-train labour forces, upgrade their services and set up strategic relationships with producers and distributors, experts advised.

Domestic retailers should take full advantage of their close relationships to each other, as well as with foreign partners, to achieve mutual benefit. Retailers should also apply IT in their management in terms of commodity classification, clients, employees and strategic partners, among other things. Bien said that the retail market contributes about 15 per cent of Gross Domestic Products (GDP) annually.

At present, retail sales via supermarkets account for only 10 per cent of sales, with the remaining distributed among traditional markets, small shops and direct sellers.

Consumption habits of Vietnamese people, especially the youth, are changing. Vietnamese increasingly prefer to shop at modern supermarkets with better quality and services.

It is hoped that by 2017, retail sales from supermarkets in Viet Nam will account for 60 per cent of sales, equal to the current level in Thailand.

The retail market pie is one that keeps getting bigger, as retail sales in the country totalled around US$27.3 billion during the first six months of this year and are anticipated to climb to $50 billion by 2010, the deputy chairwoman and general secretary of AVR, Dinh Thi My Loan said.

Source: VNS