Traditional retail is still going strong in Vietnam

09:56 | 14/01/2019 Society

(VEN) - Despite the rapid growth of electronic commerce, especially in such big cities as the capital Hanoi and the country’s southern hub Ho Chi Minh City, traditional retail channels still retain a firm niche in Vietnam, as the vast majority of consumers prefer them to online shopping.

traditional retail is still going strong in vietnam
Many consumers prefer buying goods directly at stores to shopping online

Traditional retail

During the recent Black Friday events, many people were queuing up to buy goods at major shopping centers in Hanoi and Ho Chi Minh City, preferring direct shopping at stores to buying goods online.

A recent survey by the Vietnam Report shows that traditional channels still play the leading role in Vietnam’s retail industry, with 92 percent of the country’s retail revenues generated by supermarkets and stores and six percent from e-commerce.

Stephen Wyatt, Country Head of Jones Lang LaSalle Vietnam (JLL) said that contrary to various forecasts, retail shopping is not nearing its end in Vietnam. He noted that Vietnam’s middle and upper classes were growing at the fastest pace in Southeast Asia and were expected to double in number between 2014 and 2020. With an average monthly income of more than VND15 million (US$714), they have become potential customers of traditional retailers, he said.

Multi-channel solution

Le Huu Tinh, Director of Emart Vietnam, said fierce competition and the growing rent of retail space is challenging retailers. The tastes of Vietnamese consumers are changing rapidly, and diversifying marketing channels is one avenue for overcoming those challenges.

Ralf Matthaes, Managing Director of Infocus Mekong Research said investors should focus on improving retail development by improving trade center planning and design, and management and marketing quality. A retail center should not only be a trade center but also provide consumers with entertainment, relaxation and good food, he said.

According to a forecast by the Ministry of Industry and Trade’s Trade Research Institute, Vietnam will achieve retail

growth of 11.9 percent per year from 2016-2020 and its retail market will reach about US$179 billion in value by 2020.

Vietnam is expected to have 1,200-1,500 supermarkets and other 337 shopping centers by 2020.

Thao Duong