Retailing in Vietnam

2016-03-15 | by Smollan

Despite the recent global economic slowdown, Vietnam has a healthy path for growth and is one of the most resilient and dynamic emerging economies. Vietnam is the fourth largest retail market in South East Asia and is becoming an increasingly attractive market from an economic and demographic standpoint. There is substantial medium and long-term growth opportunities due to high fragmentation, increasing deregulation, lack of market leaders, a relatively young population and a demand for modern store formats.

Traditional retail makes up 90% of the overall market, but modern formats are on the rise particularly in Hanoi and Ho Chi Minh City. These cities are also forecasted to make up 50% of consumer spend by 2020.

Vietnam has few local barriers to entry, so we expect to see local players consolidate and global players acquire local retailers. However, distribution is a key challenge in succeeding in Vietnam, as the country is predominantly rural and there is very little infrastructure.

The convenience channel is a growing and highly attractive market in Vietnam. The high fragmentation allows for expansion and the emergence of a channel leader. There is also an increasing demand for western brands, which are aspirational and perceived to be of higher quality.

 

Source: Planet Retail Limited. 2016. Vietnam retail landscape. [Report]. London.

Deloitte. 2014. Retail in Vietnam. [Report]. South East Asia.