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Retail sector poised for growth

Released at: 11:15, 19/12/2016

Retail sector poised for growth

Photo: Duc Anh

BMI Research puts average household spending growth at 9.2% each year for next five years.

by Linh San

Vietnam's total household spending growth will average 9.2 per cent per annum over the next five years, according to BMI Research, with the pace accelerating significantly towards the second half of the period. Per capita spending is set to increase from $1,197 in 2017 to $1,608 in 2020.

“We hold a positive outlook for Vietnam’s retail sector on the back of sustained economic growth momentum and a relatively tight labor market, which will drive income growth,” BMI Research wrote in its report. “Rising incomes will support strong retail sales growth, underpinned by high consumer confidence readings and strong household spending growth.”

Total retail sales of consumer goods and services in Vietnam reached VND1,724 trillion ($77.3 billion) during the first half of 2016, increasing 9.5 per cent year-on-year and 7.5 per cent when adjusted for inflation, according to the General Statistics Office.

Retailers in Vietnam have had mixed fortunes in recent times.

Parkson Viet Tower in Hanoi closed on December 15 after being open for eight years, marking an end to the presence of the brand in Hanoi. The company did not give a reason for the closure, saying simply that it would not affect other department stores under the management of Parkson in Vietnam or the benefits provided to Parkson membership card holders.

Last May it closed its 19,000 sq m store in Ho Chi Minh City’s District 7 and last year closed Parkson Keangnam in Hanoi. The company has not provided any explanations for the closures but has made assurances that they will not affect its other retail stores in the country.

Vietnamese electronics retailer Nguyen Kim completed its acquisition of e-commerce platform Zalora in Vietnam last May, which had previously planned to pull out of the country in order to cut costs.

In April, Japanese lifestyle and fashion retailer Miniso signed a franchise agreement with the Vietnamese group Le Bao Minh. The franchise holder expected to open the first three Miniso stores in September in Hanoi and to open 200 stores throughout the country over the next five years.

Japanese retailer AEON has opened its second shopping center in Ho Chi Minh City. The new 22,700 sq m shopping center covers an area of 4.6 ha and has three floors. AEON now has four centers in Vietnam and plans to expand its network to 20 by 2020.

With increasing incomes and rapid urbanization together with strong economic growth and a young population, Vietnam is one of the fastest growing retail markets in Asia. 2016 has seen a significant emergence in the retail sector highlighted by events such as high-value M&A and openings of convenience store chains; while the value of FDI remains robust.

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