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Retail

After joining WTO in 2007, the Vietnam retail industry has emerged as one of the most alluring markets for investment in the region. It represents around 15% of the country’s GDP. Many international and regional retail groups have established their presence in the market, offering the greater choice for customers whilst creating an intensive competition for domestic retailers.

Market size

Vietnam’s retail market is forecasted to reach around USD 180 billion by 2020 from USD 112 billion in 2015, driven by urbanization, the young population, increasing disposable income and government initiatives. While the overall retail market is growing quickly (averaging volume growth of 7.3%/year), modern trade (supermarkets, shopping malls, convenience stores, etc.) is expected to expand widely, accounting for 45% of the total retail market by 2020.  

To date, Vietnam has around 700 supermarkets, 125 shopping centers and 8,600 traditional markets. Of this, 4% of supermarkets and 25% of shopping centers are foreign owned companies.

Market Trends

There is an increasing M&A trend within the retail market segment. Some noticeable cases include Vingroup acquiring domestic retailers Ocean Mart and Maximark, Thailand-based Berli Jucker Corporation taking over Metro Vietnam and Japanese big corporation Aeon investing in Citimart and Fivimart.

Currently, a foreign company must obtain a business license to open a single outlet. Additional retail outlets will need to pass ENT (Economic Needs Test). The ENT framework is generally considered a barrier for foreign retailers investing in Vietnam markets as in practice, ENT has been interpreted in multiple ways in different local areas.  A lack of transparent guidelines may lead to delays.

However, this market still offers a huge potential for all retailers given its continued development. To take advantage of the business environment, the companies should enhance the knowledge of regional culture, consumer habits and regulations in order to design a comprehensive business strategy that approaches the proper consumers and optimize costs.

Key players

The Vietnam retail market is known as notable industries with the presence of both international and domestic players such as: Vingroup (Vietnam), Central Group (Thailand), Berli Jucker (Thailand), Aeon (Japan), Lotte (South Korea), and E-mart (South Korea).