Fierce competition in retail market

09:03 | 07/05/2019 Trade

(VEN) - Vietnam’s retail market is continuing to grow strongly with first quarter sales soaring 13.4 percent compared to the corresponding period last year. Competition is also increasingly fierce.

fierce competition in retail market
Vietnam’s retail market has great potential

Foreign retailers flock into Vietnam

Data from the Ministry of Industry and Trade’s Domestic Market Management Team show that retail sales reached an estimated VND910.4 trillion in value in the first quarter of this year, accounting for 76.8 percent of total domestic trade in goods and increasing 13.4 percent compared to the same period of 2018. Le Viet Nga, Deputy Director of the Domestic Market Department of the Ministry of Industry and Trade said the increasing presence of foreign distributors has caused great pressure on domestic retailers.

France’s leading retailer - Auchan -recently launched its Simply Mart retail chain in northern Vietnam, while many other world leading retailers, including Lotte, Central Group, Aeon, Circle K, and Family Mart, have poured increasing investment into Vietnam.

Most domestic retailers are small and medium in sized. They need capital, a skilled work force and information to survive competition with national foreign and transnational corporations. There are only few big domestic retailers such as VinGroup and Saigon Coop.

Foreign retailers are rich in management expertise, financially strong and experienced in different markets. However, they need trade infrastructure and distributors in Vietnam, and mergers and acquisitions (M&A) are the fastest way to attain them.

Incentive policies needed

Nguyen Tien Vuong, Deputy General Director of the Hanoi Trade Corporation (Hapro) said the state should create a business environment that promotes fair, healthy competition between domestic and foreign retailers and between traditional and modern retail channels. The state should develop policies to assist domestic retailers in branding, workforce training, getting market information, and trade promotion.

Location plays an important role for retailers so the state should give priority to domestic enterprises in accessing favorable locations at reasonable lease rates, Vuong said.

Vietnamese enterprises should work with each other to develop production and distribution and strengthen trade promotion to persuade consumers to buy domestic goods.

Vietnam has a young population, increased per capita income, growing macroeconomic stability, and new-generation

free trade agreements, which have all helped the country’s retail market development.

Bao Ngoc