Domestic retailers shaping up to compete with the big boys

09:02 | 09/08/2017 Trade

(VEN) - The rate of Vietnamese goods and their stability in Vietnamese distribution channels, such as Vingroup and Saigon Co.op, is high. Therefore, improving the competitiveness of retail businesses is also a way to increase the competitiveness of Vietnamese goods.  

Growing responsiveness

Ministry of Industry and Trade figures show that in the seven years of implementing the Buy Vietnamese Goods campaign, up to 92 percent of consumers have shown an interest in domestically produced goods. In modern retail channels, Vietnamese goods have accounted for 85-95 percent of market share, while this figure has reached about 60 percent in traditional distribution channels.

However these goods and retailers are facing increasingly tough competition.

International retail giants consider Vietnam an attractive destination. According to the Global Retail Development Index (GRDI) published by A.T. Kearney, Vietnam has climbed five notches, ranking it sixth among the world’s 30 most attractive retail markets. The attractiveness of the Vietnamese retail market is reflected in the growing presence of major foreign retailers, such as Thailand’s Big C, Japan’s Aeon, and American 7-Eleven.

Dinh Thi My Loan, chairwoman of the Association of Vietnam Retailers, says domestic retailers have made greater efforts to put Vietnamese goods into their distribution systems. However, the association is worried about fiercer competition with several foreign distribution systems and believes the key to confronting the challenge is by increasing the competitiveness of Vietnamese retail businesses as well as goods.

Vietnamese retailers are devising more and more solutions to enhance competitiveness and gain consumer trust, targeting specific customer groups. For example, the VinMart+ supermarket chain provides basic goods for families, and fast food and other utility goods for young customers.

The retailer has recently launched the VinMart Cook service with diversified menus at reasonable prices to help prepare family meals in the shortest time. As a result, VinMart+ is very popular with young families and has become a reliable shopping address.

Catching up with the online shopping trend, Co.opmart is testing a number of technology-based options, such as auto payments. In addition to a TV shopping channel, Co.opmart is in the process of completing an online sales channel, which is expected to be put into operation by 2019.

Government support

In addition to the retail sector’s own efforts, the support of local government and other authorities is indispensable to enhance competitiveness of Vietnamese retail businesses. Dinh Thi My Loan says that in order to improve competitiveness, authorities must create favorable conditions for retailers to join the chains from production to consumption. The government has shown determination to devote considerable resources to the development of high-tech agriculture and the association has proposed allowing Vietnamese retailers to participate in this high-tech agriculture chain.

Vu Vinh Phu, chairman of the Hanoi Supermarket Association, says retail businesses should cooperate with farmers to build closed chains from production to consumption in order to reduce selling prices.

He also says authorities need to provide more support for retail businesses to help them build distribution channels and create favorable conditions for the development of Vietnamese pure distribution channels.

In order to improve domestic retailers’ competitiveness, Hanoi has offered preferential loans and courses on improving governance skills and adopting advanced technologies.

Deputy Director of the municipal Department of Industry and Trade Tran Thi Phuong Lan said the city is striving to accelerate the progress of building shopping malls and supermarkets, working closely with departments, agencies and authorities of communes and districts to step up investment attraction, and develop logistics services, mostly in the Soc Son and Phu Xuyen districts.

The department will continue with bank-business community programs to facilitate access to preferential loans, and offering corporate training courses to improve management, sales and brand development skills.

The Ministry of Industry and Trade will chair and coordinate with the authorities in studying and adopting solutions to encourage the development of Vietnamese retail businesses.

Lan Phuong