Despite not being among the world’s top 30 retail markets, Vietnam remains a magnet for foreign retailers and sees the existing store operators expanding their operations.
A newcomer in the local retail market is French international retail group Auchan, the operator of supermarkets and hypermarkets. The group once came to Vietnam for exploration but did not join the playground due to property market uncertainties and expectations of low returns.
Coming back to Vietnam this time, Auchan is more determined. Philippe Longuet, CEO of Auchan Group, had just had a working session with Deputy Minister of Planning and Investment Dang Huy Dong to learn about the Government’s policies towards foreign companies active in the domestic retail market.
Auchan intends to invest US$500 million in the next ten years. The French distributor has been present in 15 nations to supply goods and also purchase domestic goods for distribution in foreign markets, according to the website of the Ministry of Planning and Investment.
If Auchan finally made its entry, it would be the second French retailer in Vietnam after Casino, the owner of the Big C supermarket chain with 22 supermarkets and hypermarkets across the country.
The local retail market has received news that NTUC FairPrice, a large retailer from Singapore, will start its operations in HCMC this May. NTUC FairPrice has formed a joint venture with domestic retailer Saigon Co.op to set up another supermarket chain.
Saigon Co.op and NTUC FairPrice will open the first hypermarket called Co-op Xtra in the city with a larger scale than a normal Co.opMart.
Meanwhile, since the beginning of this year, E-Mart, a leading retailer from South Korea, has been looking for supplies from Vietnamese enterprises to open its first supermarket. Earlier, E-Mart said it would establish the first branch in Vietnam in 2013 and expand its network to 17 retail outlets by 2017.
Recently, Aeon of Japan, though not operating any commercial center or supermarket in Vietnam yet, has announced another commercial center project in Hanoi, the third project of the group following the two under construction in HCMC and Binh Duong.
The Japanese retailer will turn a 96,000-hectare land plot in Long Bien District into Aeon Mall LongBien. The project is scheduled for groundbreaking this summer and completion in 2015.
Aeon is described as a serious competitor since it has extensive experience in operating commercial centers and substantial financial resources to deeply penetrate into the local market.
Market remains attractive
Although Vietnam has tumbled out of the world’s top 30 retail markets, its retail market still holds potential, said retailers and analysts.
Despite the persistent economic woes in the past two years, Vietnam’s retail market has been growing well. Data from the General Statistics Office show that retail sales of goods and services totaled over VND2,320 trillion in 2012, up 16% from 2011.
In the first quarter of 2013, the total retail sales of goods and services were estimated at VND636.2 trillion, up 11.7% year-on-year. Excluding the price hike factor, the retail sales growth was 4.5%, versus 4.7% in the same period last year.
Such figures prove the domestic retail market is still attractive.
Most investors are still confident in the market with a young population.
Dinh Thi My Loan, general secretary of the Association of Vietnam Retailers (AVR), said modern shopping channels now accounted for only 20% of the retail market, so their potentials remained huge. Vietnam aims to raise this percentage to 45% by 2020.
AVR stated Vietnam’s retail market had shown no signs of saturation. Retailers deem it important to stimulate consumption.
This explains why foreign retailers active in Vietnam keep expanding their networks. They are Casino (France) with the Big C brand, Lion Group (Malaysia) with Parkson, Metro Cash & Carry (Germany), Family Mart and Ministop (Japan), and Circle K (U.S.).
Recently, Lotte Group has acquired the entire stake in Minh Van Company to accelerate its network expansion. Since late 2008, Lotte has opened four commercial centers and the South Korean group intends to open an additional 30 in the next ten years.
As of end-2012, there had been some 130 commercial centers, 700 supermarkets and 1,000 convenience stores nationwide.
(Sai Gon Times)