Vietnam no longer a retail hotspot, new rankings show | Look At Vietnam

Vietnam no longer a retail hotspot, new rankings show 

June 16, 2012

Vietnam is no longer ranked in the top 30 most attractive retail markets

Vietnam has fallen out of the annually compiled list of top 30 most attractive retail markets, a result that belies great expectations raised when it officially opened to foreign retailers in 2009.
The country topped A.T. Kearney’s list of developing countries that retailers should enter in 2008, only to fall to 6th, 14th and then 23rd in the following years. The global management consulting firm last year said the country remained attractive, thanks to its growing population.
But now, Vietnam is no longer ranked in the top 30.
According to A.T. Kearney, many developing countries have become more competitive this year, with smaller markets that deliver new growth opportunities rising in the rankings, including Georgia, Oman and Mongolia. The three markets cracked the top 10 this year.
Brazil is the number one market for the second year in a row, “driven by a growing middle class economy, high consumption rates, a large, urban population, and reduced political and financial risk,” the company said. It is followed by Chile and China.
News website VnExpress cited local experts as saying the new result was not a surprise since market conditions have deteriorated in recent years, with consumption falling and business closures rising.
“Last year Vietnam’s retail market posted a growth of only 5 percent, a very humble figure compared to the usual 20 percent in previous years,” said economist Pham Chi Lan.
Vu Dinh Phu, chairman of a local supermarket association, said many retailers, both foreign and local, have complained about complicated investment procedures and high rentals.
There has to be a "large-scale overhaul" to revive the market, he said.
Even though the market has been open for more than three years and several foreign retailers have already made their presence felt in Vietnam, many foreign business groups continue to say that they are still being treated differently than locals.
In particular, they have called for elimination of the Economic Needs Test, which restricts the number of outlets that a foreign retailer can open in Vietnam.

Vietnam to remain attractive to retail investment until 2012

HANOI, Aug 3, 2009 (Asia In Focus via COMTEX) -- Vietnam would remain an attractive destination for retail investment until 2012, said a US market research company, citing the country's strong GDP growth, regulatory structure changes favouring foreign investors and increasing consumer demand for modern retail concepts. According to US-based market research consulting services company RNCOS, rapid growth in Vietnam's retail market in the recent past has made the country an attractive destination for multinational retailers.

* Vietnam Retail Analysis (2008-2012), a research report from RNCOS, also said that the retail sector market in Vietnam was much smaller compared to other developing economies in Asia, but had shown strong fundamentals, with the value of retail sales having expanded rapidly to nearly US$39 billion in 2008, from around US$23.7 billion in 2005.

* The RNCOS predicted that Vietnam's retail industry would surpass US$85 billion in revenue by 2012 and modern retail channels are expected to play a crucial role in the future growth of the industry, improving their position in the market.

Report: Lotte to invest $5 bln in Vietnam retail

South Korean conglomerate Lotte Group will invest $5 billion in the next 15 years to develop 30 supermarkets in Vietnam to tap the Southeast Asian country's fast-growing retail market, state media reported Thursday.
The company opened its first Lotte Mart supermarket in Ho Chi Minh City on Wednesday with an investment of $75 million, the Youth newspaper quoted Dao Thi Minh Van, deputy general manager of Lotte Vietnam, a Lotte Group subsidiary, as saying.
Lotte will invest in four more retail outlets in the southern commercial hub and 10 others in the capital Hanoi, the northern port city of Haiphong, the central city of Danang and the southern Mekong Delta city of Can Tho in coming years, Van was quoted as saying.
Lotte Vietnam will eventually have 30 supermarkets in Vietnam with a total investment of $5 billion by 2024, Van said.
U.S. based management consulting firm A.T. Kearney said in June that Vietnam had ended India's three-year reign as the most attractive emerging market destination for retail investment.
Vietnam with a population of 86 million has sustained GDP growth of at least 7 percent annually over the past decade.
The country's retail market reached $52 billion in the first 11 months of this year, posting an increase of 31 percent against the same period of last year, according to government figures.
German Metro, French Big C and Malaysia-based Parkson have opened retail outlets in Vietnam.

Foreign retailers increase presence in Vietnam

Many foreign distributors are eagerly implementing their plans to expand their operations in the promising Vietnamese market at a time when the country is preparing to fully open its retail market in January 2009, pursuant to the WTO’s commitments.
In the first nine months of this year, the country’s total retail sales value reached 694 trillion VND, a year-on-year increase of 30 percent.One of Japan’s five largest electronics retailers, Best Denki, is preparing to establish a joint venture in Vietnam in November. The group has previously selected Ben Thanh Marketing Company, which owns the group’s Best Carings brand, as its partner for franchising. According to Best Denki’s Singapore-based Regional Marketing and Business Development Director C. J. Raj, the group has plans to open 10 more electronics supermarkets in several big cities in Vietnam, in addition to the current ones in Hanoi and the southern city of Can Tho. The move is aimed at winning 5 percent of Vietnam’s electronics market, which is worth a total of 3 billion USD annually, by 2012. Vietnam’s largest foreign distributor, Metro Cash & Carry, was granted permission to open its ninth outlet in Bien Hoa City in the southern province of Dong Nai in August. The group has announced plans to open a further 12 outlets in Vietnam. Since it began operations in Vietnam six years ago, Metro Cash & Carry has invested 120 million USD in eight wholesales centres across five cities and provinces. The Republic of Korea (RoK)-based supermarket group, Lotte, is preparing to open a trading centre in Ho Chi Minh City’s South Saigon area, while another RoK group, GS Retail, plans to build 10 shopping centres in southern Binh Duong province in the next two years. Meanwhile Thai Charoen Pokphand (CP) Group, which is famous for producing fresh and processed food, has moved quickly to open a chain of Fresh Mart outlets in Ho Chi Minh City. In this context, domestic firms are bracing themselves against stiff competition from better equipped foreign investors. With the aim of establishing a popular supermarket chain for consumers from all walks of life, last weekend the Saigon Trade Corporation opened one of 20 stores it plans to build in the country between now and 2010. Saigon Co.opmart of the Saigon Co.op has joined forces with the BMC Construction Materials and Construction Installation, which specialises in real estate, to open supermarkets in BMC’s trading centres. According to the Vietnam’s Retail Association, social retail sales for the 2003-2007 period increased by between 18-22 percent per year, far exceeding the 8-10 percent figure recorded in the previous period. In the first nine months of this year, the country’s total retail sales value reached 694 trillion VND, a year-on-year increase of 30 percent. Vietnam is home to 400 supermarkets, 60 trade centres and 2,000 convenience stores. The country expects to have 700-750 supermarkets, 150 trade centres and thousands more convenience stores by 2010.
(Source: VNA)