Vietnam discovers convenience of convenience stores

The number of convenience stores in Vietnam is increasing rapidly

A Deloitte’s report shows that the number of convenience stores in Vietnam has quadrupled since 2012, accounting for the biggest proportion of newly founded shopping facilities in 2018. The convenience store market has attracted Vietnam’s leading retailers including VinGroup and Saigon Co.op, and such leading foreign firms as Circle K, B’s Mart, Mini Stop, 7-Eleven, and GS25, among others.

Domestic enterprises are dominating the market, carving a 70 percent niche. As of late January 2019, according to a Deloitte’s report, there were 1,700 Vinmart+ stores throughout Vietnam, while foreign-owned convenience stores (excluding the Shop&Go sold to VinGroup) totaled more than 600 facilities.

Convenience stores in Vietnam have reached a compound annual growth rate (CAGR) of 35.7 percent from 2017-2019 and an estimated CAGR rate of 37.4 percent in 2017-2021, much higher than in other Southeast Asian countries - the Philippines (24.2 percent), Indonesia (15.8 percent), Malaysia (10.5 percent), and Thailand (6.6 percent).

A 2019 business outlook of the Vietcombank Securities Company (VCBS) shows that mini supermarkets and convenience stores were the fastest growing retail models in Vietnam in 2015-2017. Although they accounted for only 0.4 percent of the total retail sales, mini supermarkets and convenience stores took the lead in terms of CAGR growth - 48 percent in the 2012-2017 period. This growth has helped attract foreign retailers - Family Mart, Circle K, Bs Mart, and GS25 - to the Vietnamese retail market.

Dinh Thi My Loan, Chairwoman of the Association of Vietnam Retailers said it is considerably simpler to apply for a license for a 500- square-meter convenience store than for a supermarket or hypermarket. Apart from offering a diverse range of consumer goods, convenience stores provide services of electricity and water bill payment, air ticket booking and money withdrawal, among others.

Convenience stores are becoming strong rivals of traditional trade operators. While they account for about 20 percent of shopping centers in foreign countries, convenience stores represent less than 10 percent of all shopping places in Vietnam, highlighting the huge potential for such facilities in Vietnam.

Tran Duy Dong, Director of the Domestic Market Department under the Ministry of Industry and Trade said mini supermarkets and convenience stores are expected to develop more strongly in 2019 and the following years to meet consumer needs. However, Vietnamese retail businesses need to improve the quality of products and customer services and diversify their range of products if they are to expand their market share.