Vietnam mega malls retain retail allure despite online shopping surge

Large-scale shopping centers, also called mega malls or hypermarkets, have become increasingly popular in Vietnam despite the robust online shopping surge in recent years.

Testament to their increasing popularity is the effective operations of mega malls owned by sector giants like Vincom Retail, Aeon and Central Retail.

According to the General Statistics Office, total retail sales of goods and consumer services in July grew 9.4% year-on-year to VND3,625 billion ($144 million). In the first seven months of 2024, the figure surged 8.7% year-on-year to VND3,626 trillion ($144.2 billion).

A new Asia-Pacific consumer behavior study of more than 7,200 consumers published in June showed that Vietnam had the highest online shopping rate in the region at 67% thanks to the popularity of e-commerce platforms like Shopee and Lazada. However, in-store shopping managed to hold its own at 63%.

Hong An, senior director of commercial leasing at Savills Ho Chi Minh City, said that retail space in Vietnam, especially in Hanoi and HCMC, was a very effective and profitable investment segment.

Each city has about 1.5 million square meters of retail space for rent, and an operating capacity of over 90% has been maintained for many years, showing that the mega mall model continued to be attractive, she said.

An said large-scale commercial centers with 100,000 square meters of floor space or more was attracting attention and resources from many big domestic and foreign investors like Vincom Retail, an arm of Vietnamese private conglomerate Vingroup, Japan’s Aeon Mall, and Central Retail, a subsidiary of Thailand’s Central Group. In the near future, Central Pattana, another member of Central Group, will join this market, she added.

Highly experienced and reputed foreign investors in the region play a big role in mega mall development and operation in Vietnam; while Vietnamese investors ensure coverage in the retail sector with access to land funds, she said.

"Domestic investors’ biggest strengths are the understanding of consumers and existing land funds. Foreign investors have their own strengths and strategies. As we can see, Aeon and Central Retail are long-standing, famous retailers in the region," An said.

Long-term strategies

Besides their development potential, other factors have to be considered to ensure sustainability of the mega mall model in a currently volatile retail environment, An said.

"The biggest challenges in developing and operating mega malls include not only the initial development plan but also effective promotion and rental strategies."

She said consistency in development, promotion and rental strategies in the long term was key to success.

"In fact, when investors have different commercial business chains, they will create a unique and consistent way of operating. This creates trust for retailers when doing business in shopping malls. Tenants will choose shopping mall chains that have built up a portfolio of loyal customers."