As market research Vietnam has shown, the retail industry in Vietnam is growing. Like the country’s economy in general, the industry is growing rapidly. Currently dominated by traditional retails and local investors, the retail industry is steadily moving to more modern, digitalized, and open to foreign investors. We will explain the opportunity present in the country’s growing retail industry.
Vietnam Retail Industry in Brief
Vietnam retail industry is forecasted to have a double-digit growth rate between 2019 and 2024. Various factors contribute to the growth of the retail industry. Strong economic growth, more openness to foreign investment, a growing middle class, increased purchasing power, and free trade agreements with neighboring countries are among the factors that drive the rapid growth of the retail industry.
Currently, traditional small shops dominate the market share in the Vietnam retail industry. This is very likely to change in the foreseeable future. The increasing presence of department stores, mobile phones, and electronics will make a room for more modern types of retail. The market share of traditional small shops, accounting for 65% of the market share, will gradually decrease.
Shares in the Retail Industry
In 2019, the retail industry is worth approximately $140 billion, which accounts for almost 60% of the country’s GDP. The followings are the shares in the retail industry:
- Department stores, accounting for $60 billion
- Electronics, watches, mobile phone, pharmaceuticals, and jewelry retail segment, accounting for $11.35 billion
- Other retail segments, accounting for $70.65 billion
The retail industry provides various opportunities for both local and foreign investors. First and foremost, the industry is rapidly growing and also expanding. Currently, most retailers are present in major cities. This, however, will soon change. Retailers are planning to expand their presence in smaller cities in the next several years. The expansion also happens online with e-commerce.
Second, the retail industry is becoming more open. Previously, the Vietnam government restricted foreign presence in the industry. Now, the industry has become more open. In 2018, the Vietnam government ruled that foreign ownership restrictions are removed to sustain the industry’s growth. This allows foreign retailers and investors, both are very eager, to enter the retail industry with ease.
Third, the increase of Vietnamese purchasing power and their willingness to spend more money to get better quality food at modern stores. This attracts not just local but also foreign players from neighboring countries to enter the retail industry. Foreign companies from South Korea and Japan are eager to bring their own brand of convenience stores and supermarkets into Vietnam.
As many players are involved, the retail industry in Vietnam is very competitive. This aspect is particularly important for foreign retails. Although the retail industry is alluring, many foreign retail fails to profit. According to market research Vietnam, one of the reasons why is due to the failure of these foreign retails to personalize and localize in the development process.
The retail industry in Vietnam is not only growing rapidly but also shifting from traditional to modern and restrictive to more open, as market research Vietnam has shown. Coupled with rapid growth, growing demand, expansion, and the increase in purchasing power, these changes in direction provide investors, both local and foreign, with opportunities to profit from the industry.