The shifting face of retail in Vietnam
The shifting face of retail in Vietnam
The 2018 retail landscape in Vietnam was more challenging than ever, and the major market chains were trying to adapt quickly to changes to remain relevant. Consumers’ attitude toward shopping in the region were impacted by four major transformations: urbanisation, more single households, ageing, and increasing wealth.
Global market research company Euromonitor International published its list of top 100 retailers in Asia, showing the changes in the ranking of top players in the retail industry in Vietnam.
In 2017 and 2018, retail in Vietnam continued to become more consolidated as key players acquired smaller companies to expand their network and increase their market share: Mobile World JSC completed its acquisition of pharmacy chain Phuc An Khang and conglomerate Vingroup JSC acquired electronics and appliance specialist retail chain Vien Thong A and supermarket chain Fivimart.
These activities have quickly affirmed the leading status of the key players while eliminating smaller companies from the competition. Besides achieving outlet expansion, key players also look at these activities as a quick way to enter a new retail channel, similar to the way Mobile World JSC entered the pharmacy arena with the acquisition of the Phuc An Khang chain.
In 2018, internet retail continued to record the fastest retail value growth rate among all channels in Vietnam’s retail industry. Internet retail has widened to include more products such as fresh grocery, besides more traditional online ticket items such as electronics, apparel, and footwear.
Internet retail is also seeing a rising number of individual sellers or small businesses, which sell through third party sites such as Lazada or Shopee or via social media, including Facebook and Instagram. This informal section of retail is highly unorganised. In 2018, the government enforced measures to crack down on illegal practices, but the effect of those measures is yet to be seen.
Southeast Asia is often quoted as one of the world’s fastest-growing regions, yet each country’s cultural and economic diversity makes it challenging for retailers to thrive. Two key trends have emerged in the region – consumers’ increased appetite for convenience and the rise of digital commerce. Retailers that have been able to adapt to these changes have seen much success.
With the region’s rising internet connectivity and high mobile penetration, internet retailers have enjoyed strong growth over the past year.
