Vast Potential in Vietnam Retail Market

Strong growth indicators make Vietnam attractive destination for retail investment Vietnam continued its dominance in the top 10 emerging global retail markets in 2009, according to A. T. Kearney’s Global Retail Development Index1. However, it has moved down five places to sixth position in the 2009 index from the topmost slot in 2008, behind India, Russia, China, UAE and Saudi Arabia. A. T. Kearney attributed the decline to inflationary pressures in the latter half of 2008 and a significant slowing in consumer spending in a largely export-driven economy. Despite its drastic fall in rank in 2009, Vietnam remains an attractive destination for retail investment due to its strong GDP growth, changes in the country’s regulatory structure - favoring foreign investors and increasing consumer demand for modern retail concept. Strong GDP Growth: With an economic growth of 5.3% in 2009, Vietnam appears to be outperforming its neighbours at the present time and is at a more advance stage of economic recovery. The real GDP growth rate for 2010 is targeted at 6.5% by the Government. Modern Retail Concept: According to the consumer survey done by AC Nielsen Vietnam in November 2008, Vietnamese consumers prefer to shop in modern retail centres than traditional markets. Another survey conducted by Saigon Marketing Newspaper in 2008 also reveals that around 50% of the consumers in Ho Chi Minh City are purchasing goods in supermarkets while only 15% buy products in traditional markets. The reason is that modern retail centres are becoming more convenient since they are opened for longer hours, have more diversified products, hygienic space and fixed pricing. Favorable Regulatory Structure: Vietnam’s membership in the World Trade Organisation has led to a rapid growth in Vietnam’s retail market in the recent past and made the country an attractive destination for multinational retailers. To date, the country has about 400 supermarkets and 2,000 convenience stores, operated by both domestic and global companies. Many global retailers are well established in Vietnam, including South Korea’s Lotte, Japan’s Seiyu, France’s Big C, Malaysia’s Parkson, Hong Kong’s Dairy Farm and Germany’s Metro. Domestic retailers are expanding rapidly in the face of foreign competition. Saigon Co.op is expanding its supermarket and convenience food chains nationwide. Read more: http://capitalandinside.com/index.php/investment/409-vast-potential-in-vietnam-retail-market