Retail sector eyes growth opportunities

Customers browse new products at the Co.opXtraplus supermarket in HCM City’s Thu Duc District. Modern retail channels are anticipating strong growth next year, according to statistics from the Viet Nam Retailers Association (VRA).

Modern retail channels in Viet Nam are anticipating strong and diversified development next year, said Dinh Thi My Loan, chairwoman of the Viet Nam Retailers Association (VRA).

Statistics from the association indicated that modern retailing accounted for only 25 per cent of the country’s total, thus offering great potential for retailers. The rates in the Philippines, Thailand, China, Malaysia and Singapore were 33 per cent, 34 per cent, 51 per cent, 60 per cent and 90 per cent, respectively.

Speaking at the forum on the retail industry in Viet Nam last Friday, Loan said the channels had become more important and customer preferred than others.

According to the Ministry of Industry and Trade’s plans, the country would need 550 new supermarkets, bringing the total to 1,200-1,300 by 2020, while those in new trade centres would reach 180.

“Online retail channels were expected to boom in the upcoming years because of their huge potential,” she added.

However, she noted that online purchases have faced barriers, as customers have preferred cash, rather than other payment methods, and they have not fully trusted the security of online payment methods.

Talking about traditional retail channels, she said retail would continue change, under the pressure of competition with modern sales methods.

“Purchasing at markets and traditional shops will still account for a high percentage by 2015, and even in the future, as retail channels have their own advantages and attractions, in comparison with others,” she said.

Retail markets in rural areas would also expect to develop next year.

A survey from the association revealed that 95 per cent of households in rural areas are ready to purchase televisions, 92 per cent could buy electric and gas cookers, 33 per cent will buy radios, 30 per cent anticipate purchasing refrigerators.

The food and foodstuff retail sector was predicted to hold a key position, but there would be opportunities in the non-food and foodstuff retail sectors, she added.

VRA said the retail food and foodstuff sectors made up two-thirds of the total turnover, while that of the non-food and foodstuff retail sector saw a rapid growth rate of 16 per cent in the past few years.

The non-food industry focused on electronics, shoes, clothing, cosmetics and housewares.

Experts also forecast that goods of retailers’ brands would see high and sustainable growth rates next year.

Sharing these ideas, Nguyen Thanh Hung, general secretary of the Viet Nam E-commerce Association (VECOM), said the retail industry in the country, which has a population of 90 million, has a huge potential, despite local consumers tightening their spending in recent years due to the economic downturn.

Of note, the population using the internet accounted for 36 per cent, while access for online shopping was 57 per cent.

“Turnover from online retail is expected to reach US$8 billion by 2017, despite the turnover last year being only $700 million,” Hung said.

He noted that online shopping has become a vital trend, pointing to a survey that said users in Viet Nam spent the most time online, taking second place after Thailand among ASEAN countries.

In addition, he said local players have been doing well in Viet Nam, as the top 5 retailers were all domestic companies.

He added that barriers prevent online shopping from developing, including poor products and logistic systems, as well as the safety of information.

“Online retailers should have long-term strategies and research to individualise online marketing to overcome these barriers,” he said.

Tran Nguyen Nam, head of the ministry’s Domestic Market Department, said total retail sales and revenue this year was expected to reach VND2.6 trillion ($123.8 million), posting a 13 per cent increase from last year.

Nam said the Government would create a favourable business environment for organisations and individuals to develop modern retailing and implementing commitments under the World Trade Organisation.

Arn Vogels, Indochina’s country manager and chief representative, said worldwide retail sales are expected to reach nearly $1 trillion this year. However, Viet Nam’s e-commerce remains small, as the internet has been used primarily for work and leisure.

He said enabling debit cards for domestic and international e-commerce would be a key to Viet Nam’s e-commerce growth.

It would also need to address concerns with the reputability of merchants and ease of online transactions, he said.

Meanwhile, retail sales were shifting to smart phones and merchants need to be prepared. Retailers must create shopping experiences optimised for these smaller screens.

Le Hong Minh, public relations director of Kangaroo group, added that retailers should develop communications at supermarkets, trade centres and shopping malls to promote retail distribution channels.

Minh said a survey from Nielsen Viet Nam showed that 23 per cent of customers asked for information from staff at supermarkets. In addition, advertisements at supermarkets caused sales to rise by 28 per cent. — VNS

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