Vietnam retail space maintains stronghold despite e-commerce boom: experts

Retail stores will continue to hold a significant position in the Vietnamese market, despite the growing pressure from e-commerce, according to experts.

E-commerce is rapidly reshaping consumer habits in Vietnam. Data firms YouNet ECI and YouNet Media predicted that Vietnam’s e-commerce market could reach a total transaction value of $49.9 billion by 2028.

Property consultancy firm Savills Vietnam reported that e-commerce offers numerous benefits, including quick shopping, a wide variety of products, and easy price comparisons.

Additionally, digital platforms enable businesses to reach customers on a large scale, without being limited by geographic location. However, challenges remain in terms of product experience, delivery times, and product quality.

On the other hand, traditional retail spaces continue to play an essential role, providing tangible experiences, direct consulting services, and fostering customer trust. Therefore, retailers must adapt and create a new trend by blending online and offline retail models.

Matthew Powell, director of Savills Vietnam, emphasized that combining online retail and traditional stores would help businesses maximize their advantages, leveraging digital technology to expand while ensuring a comprehensive consumer experience.

Major brands are heavily investing in this integrated model to offer convenience to customers while preserving the value of physical retail spaces.

In Vietnam, a country with a distinctive traditional retail culture, grocery stores and retail spaces play a pivotal role in daily life. They are not just transaction points but also places of connection and community building. As such, retail stores will continue to maintain a significant presence in the market, Powell added.

He further noted that shopping malls and retail spaces continue to maintain high leasing occupancy rates and show potential for development in new directions to meet modern consumer demands. Key retail markets such as Hanoi and Ho Chi Minh City have reported active activity. In Q4/2024, retail space occupancy in Hanoi remained stable at 85%, while Ho Chi Minh City reached 93.5%.

Demand for retail spaces remains high

Sharing her insights on the impact of e-commerce on the demand for retail space, Hoang Nguyet Minh, an expert at Savills Vietnam, argued that e-commerce is still too young in Vietnam to significantly affect demand for retail space.

Currently, e-commerce platforms are seeing better sales from Vietnamese brands and local retailers. Meanwhile, foreign retail brands entering the market must prioritize expanding their physical retail spaces in Vietnam to build a presence before pushing sales on e-commerce platforms.

The trend of foreign brands abandoning physical retail spaces to focus entirely on e-commerce has not yet emerged. Therefore, over the next five years, e-commerce is unlikely to reduce the demand for retail spaces in Vietnam, and demand for retail spaces remains high.

However, Minh acknowledged that the supply of retail spaces, particularly quality shopping malls in Vietnam, remains limited and does not fully meet the requirements of brands. Compared to regional countries like Thailand, Singapore, and Malaysia, Vietnam’s retail space lags in terms of scale, quality, and experience.

Over the past five years, the supply of retail spaces in Hanoi has only grown at an average rate of 3% annually. The market still favors property owners due to a limited number of high-quality, well-planned shopping centers. The supply of modern retail spaces is growing slower than the demand from international brands.

Minh believed that the Vietnamese retail market still holds significant potential. Between now and 2027, the market is expected to see a series of new, international-standard projects.

By the end of 2025, the Hanoi market is set to expand with 140,700 square meters of new retail space from four shopping centers and three retail podiums. From 2026 to 2027, the supply will increase by another 174,100 square meters of leasable space from seven projects.

Key projects include Hanoi Centre at 175 Nguyen Thai Hoc and Starlake B1CC1 & B1CC2. In Ho Chi Minh City, 12 future projects are expected to enter the market, adding 165,429 square meters, growing by 3% annually from 2025 to 2027.

The expert predicted that Vietnam will become one of Southeast Asia's most attractive retail markets, thanks to its young population and growing middle class. However, this will require continued investment in infrastructure, an increase in high-quality retail spaces, and an enhanced shopping experience to allow brands to fully capitalize on both online and offline shopping channels.