Foreign retail groups undoubtedly are a powerful influence in the domestic market. However, Vietnamese retailers are vowing to ‘play big’ to gain the upper hand in the home market.
When Vietnam opened its retail market, pessimistic analysts predicted that foreign retailers would expand their networks in Vietnam and swallow Vietnamese retailers easily.
Related: M&A Consulting services in Vietnam
It is true that foreign retailers have made big investments in Vietnam. Aeon from Japan has opened a series of large shopping centers, and plans to set up 20 centers in Vietnam by 2025. Meanwhile, Lotte Mart has invested VND9 trillion to build more than 10 shopping centers and hypermarkets.
However, Vietnamese retailers have not been swallowed by foreign big players as predicted, but have been developing strongly. Thai Thi Thanh Hai, CEO of VinCommerce, said the retailer plans to have 300 VinMart supermarkets and 10,000 VinMart+ convenience stores by 2025 in all 63 cities and provinces throughout the country.
VinMart of the Vietnamese dollar billionaire Pham Nhat Vuong has successfully taken over a series of retail brands, from Vintexmart, Maximark, Fivimart to Zahhmart, Shop&Go and Queenland. After five years of operation, VinMart and VinMart+ have become the largest retail networks with 2,600 supermarkets and stores in 50 cities and provinces.
Meanwhile, Saigon Co-op is present in 43 cities/provinces with 800 supermarkets, shopping malls and convenience stores. The Gioi Di Dong (Mobile World) has opened 434 shops so far this year, including 320 Bach Hoa Xanh and 136 Dien May Xanh shops. The retailer has also set up 10 more new shops specializing in distributing low-cost mobile phone products.
In most M&A deals, the buyers are foreign companies. However, in some deals made recently, Vietnamese retailers took over foreign ones. VinCommerce took over 87 Shop&Go shops and most recently, Saigon Co-op took over Auchan.
Ogawa Koji from Kewpie Vietnam said that with the very fast growth of Vietnam’s retail market, including offline supermarkets and online websites, Vietnam may soon surpass the Japanese retail market.
Aeon plans to increase the goods import turnover from Vietnam to $500 million by 2020. The country has the potential to become a high-quality food supplier for Japanese consumers. The figure is hoped to rise to $1 billion by 2025.
According to Dinh Thi My Loan, chair of the Vietnam Retailers Association, the Vietnamese retail market in recent years always maintains an impressive growth rate of 10 percent per annum. Vietnamese retailers have been growing well and can compete with foreign retailers.
Loan said in order to expand networks, retailers need to have a deep understanding about localities and local consumers.
“Many retailers failed in the Vietnamese market because they didn’t understand the market and Vietnamese consumers,” she said.