Seminar hears sector forecast to grow 11.9 per cent in 2016-2020 period.
By 2020 Vietnam will have 1,200-1,500 supermarkets, 180 business centers, and 157 shopping centers, with retail revenue totaling $179 billion, Deputy Minister of Industry and Trade Do Thang Hai told a seminar on the opportunities and challenges for Vietnam’s retail sector, held by the Vietnam Institute for Trade under the Ministry of Industry and Trade (MoIT) on May 18.
The sector is forecast to grow by 11.9 per cent in the 2016- 2020 period, with modern retail channels to account for 45 per cent by 2020.
The forum heard of the great potential Vietnam’s retail market holds. “According to A.T.Kearney, a US- based research firm, Vietnam is ranked at 28th on the list of attractive retail markets in the world,” said Dr. Le Huy Khoi from the Vietnam Institute for Trade.
MoIT figures show that Vietnam’s retail market recorded an average growth rate of 7.3 per cent in the 2010-2015 period. Modern retail accounted for about 25 per cent of total retail sales, increasing 12 per cent on average from 2010 to 2015. He noted, however, that retail networks remain sparse given Vietnam’s sizeable population.
Dr. Khoi also identified a number of difficulties and challenges facing the country’s retailers.
Under a number of free trade agreements Vietnam must open up its market and domestic retailers will face fierce competition from foreign investment. According to MoIT figures, sales at foreign-owned supermarkets were three to four times or even seven to eight times higher than at local supermarkets due to the former’s large-scale investment.
Consumption has also declined due to the economic uncertainties and many businesses have been forced to cut production. Some people have lost their jobs or suffered pay cuts and so tightened their belts.
“The biggest difficulty for local retailers is a lack of capital,” Dr. Khoi told the gathering. “While foreign retailers can afford to incur losses for five to seven years because of the strong financial position of their parent company, Vietnamese retailers will exhaust their available capital if they incur losses for two or three years.”
High inputs and operational costs at modern retail facilities have led to inefficient business operations, difficulties in accessing credit, and a low capacity to dominate the market.