The presence of big global brands at an upcoming event in Ho Chi Minh City is expected to lift the retail market in Vietnam, according to the Ministry of Industry and Trade.
The ministry's (MoIT) European-American market department said that a number of international brands such as Walmart, Amazon and AES of the U.S, Aeon of Japan and Central Retail of Thailand will attend the Vietnam International Sourcing Expo in Ho Chi Minh City in September.
The ministry’s data shows that Vietnam’s total retail sales of consumer goods and services in the first six months of 2023 was VND3,016 trillion ($127.4 billion), up 11% year-on-year. Of which, revenue from accommodation and food services increased 18.7%, tourism 65.9%, and retail sales of goods 9.3%.
Many forecasts indicate that domestic demand will better recover in the second half of the year.
From July 1, VAT has been cut for many groups of consumer goods from 10% to 8%, and the base salary for cadres, civil servants, public employees and armed forces has increased by 20% from VND1.49 million to VND1.8 million ($76) per month.
These factors are expected to contribute to increasing market demand, directly affecting the expected sales of retail businesses, said the ministry.
According to Vu Thi Hau, former chairwoman of the Association of Vietnam Retailers (AVR), the domestic retail market is attracting not only domestic manufacturers but also foreign retailers.
In 2021-2022, retail sales via e-commerce channels developed strongly in Vietnam. Retailers invested a lot in technology and human resources to meet the requirements of this new trend. Manufacturers also made use of their own websites as well as e-commerce and social networking platforms to promote sales.
“This is the future trend of the retail industry,” Hau said.
According to the MoIT, Vietnam's retail market size is about $142 billion and is expected to increase to $350 billion by 2025, contributing 59% to GDP.
Overall, the e-commerce sector’s total revenue grew 46% year-on-year to VND92.75 trillion ($3.92 billion) in the first half of 2023.
Foreign giants flock to Vietnam
Thai retailer Central Retail Corp has announced that it will invest an additional VND20 trillion ($845.1 million) in the market in the next five years.
With this investment, Central Retail will expand its sales network to cover 55 provinces and cities nationwide from the current 40, said Nguyen Bich Van, the company’s communications director.
Central Retail plans to boost sales in the Vietnamese market in the 2022-2026 period to VND65 trillion ($2.75 billion), focusing on multi-channel businesses in the fields of food and trade centers, she added.
Another foreign retailer, Aeon Group from Japan, is seeking to expand its Vietnam mall network to 25 by 2025 and has earmarked around $1 billion for the purpose.
There are six Aeon Mall outlets in Vietnam: two each in Hanoi and Ho Chi Minh City; and one each in the southern province of Binh Duong and northern city of Hai Phong.
The retailer has so far invested more than $1.18 billion into Vietnam, Aeon Group executive chairman Akio Yoshida said at a meeting with Vietnamese Prime Minister Pham Minh Chinh in Japan’s Hiroshima in May.
Meanwhile, Walmart of the U.S. said it will seek cooperation opportunities with Vietnamese partners in clothing and accessories, footwear, textiles and accessories, home electronics, furniture, and food and consumer goods.
According to Su Ngoc Khuong, investment senior director at Savills Vietnam, global retailers all see Vietnam as a lucrative market with a population of more than 100 million and good purchasing power, and many of them have invested in the country.
However, Nguyen Anh Duc, chairman of the Association of Vietnam Retailers, said that currently businesses do not have a strong connection in stimulating demand. Therefore, they should connect with each other and clearly define the way ahead such as a green economy or circular economy.
Four commercial center projects, namely Central Premium Plaza, Vincom Megamall Grand Park, Sunrise City Central and Emart 2, are expected to be put into operation in the coming time, adding more than 116,000 square meters of retail space, he said.
“This signals a bright prospect for the Vietnamese retail market in the long run when it can properly meet the needs of the new generation of consumers in Vietnam,” he noted.