Retail maintains growth despite pandemic
Retail maintains growth despite pandemic
The fourth wave of the Covid-19 pandemic has caused many enterprises to shut down completely. This is because consumers have tightened spending, which has seriously hit both wholesale and retail markets. However, despite this setback, the retail industry was still able to achieve new sales record in 2021, surpassing USD 173 bn.
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Retail hardest hit
Ho Chi Minh City was the hardest hit by the fourth wave of the pandemic, especially in the third quarter of 2021. Among the most seriously affected industry groups were retail and services because a multitude of shops and traditional markets had to shut down under government regulations to maintain strict social distancing.
According to the socio-economic report issued by the General Statistics Office, total retail sales of consumer goods and services in July 2021 decreased by 8.3% over the previous month, and 19.8% over the same period in 2020. In August 2021 this number decreased by 10.5%, and 33.7% over the same period in 2020. Also, total retail sales and revenue of consumer services decreased by 28.3% in 2021, compared to the same period in 2020.
Many surveys conducted in the third quarter of 2021 also showed that retail businesses were seriously affected by the pandemic. According to a survey by Vietnam Report Joint Stock Company (Vietnam Report), many retailers of durable goods, such as refrigerators and jewellery, said that sales during the fourth wave of the Covid-19 pandemic were only 20% or up to 40% more than before. There are currently 71.43% enterprises of durable goods that have been seriously affected, and 28.57% of enterprises are moderately affected. Some retail enterprises such as the Phu Nhuan Jewellery Company (PNJ) recorded the highest loss in its history. Accordingly, in the third quarter of 2021, PNJ had a net loss of nearly VND 160 bn because it had to close down almost 80% of its stores. Similarly, consumer retail chains of Gioi Di Dong and Dien May Xanh, also saw reduced revenue by 24% in the third quarter of 2021 due to temporary closure of 60% to 70% of stores.
The strong negative impact of the fourth wave of the pandemic caused many wholesale and retail businesses to leave the market, even when activities gradually began to return back to normal by October 2021. By the end of November 2021, 33,309 enterprises in wholesale, retail and repair, withdrew from the market, accounting for 31.3% of total number of enterprises leaving the market altogether, becoming the largest number of enterprises leaving the market, and setting an unprecedented record for the retail industry. The difficulties of the third quarter made many people doubt the growth ability of the retail industry in 2021. Contrary to this, the retail industry still reached record sales of more than USD 173 bn, becoming a bright beacon during the ongoing pandemic.
Retailers optimistic
According to the General Statistics Office, the total retail sales of consumer goods and services in the fourth quarter of 2021 reached more than VND 1,312,000 bn, up 28.1% compared to the previous quarter and down 2.8% over the same period last year. For the whole year of 2021, the total retail sales of consumer goods and services are estimated at VND 4,789,000 bn, down 3.8% compared to the previous year, if excluding the price factor, it will decrease by 6.2%. However, if counting the retail segment of goods alone, in 2021 it will reach nearly VND 3,951,000 bn, equivalent to USD 173.28 bn, up 0.2% compared to the retail sales of goods in 2020. Thus, the retail market in 2021 continued to record a new record increase by USD 1.2 bn compared to 2020.
Mr. Nguyen Hoang Dung, Chairman of Sustainable Development Services and Leader Training Company Limited (SDLT), spoke with Saigon Investment about the difficult situation surrounding the Vietnamese retail market. Mr. Dung pointed out that retailing of goods is inherent in many areas, and even during the pandemic there are still industries that are showing positive growth such as food, pharmaceuticals or product groups for phones, laptops, and tablets, which all serve the needs of working people and those studying from home.
According to Mr. Dung, the retail market in 2021 only saw a sharp decline in the third quarter, while the first and second quarters still maintained a growth momentum. Specifically, in the first six months of 2021, the total retail sales of consumer goods and services reached nearly VND 2,464,000 bn, an increase of 4.9% over the same period last year, if excluding the price factor increase of 3.55%. Retail sales of goods in the first six months of 2021 reached VND 1,985,000 bn, accounting for 80.6% of the total and up 6.2% over the same period in 2020.
By the fourth quarter of 2021, purchasing power gradually recovered, which is the reason why the retail market recorded good sales. In response to the question of many businesses closing, the unemployment rate increasing, consumers tightening spending after the pandemic, and why the purchasing power in the fourth quarter of 2021 recovered, Mr. Dung said that the number of unemployed workers had increased, and the spending of this group of people was not large. However, even during the pandemic, there are still many people who increased their income. The middle-class group of Vietnam is increasing, and this group of people has a large consumption expenditure. This is also the group that retailers are targeting for sales currently.
It is a fact that in 2021 a record number of retail businesses left the market, although some analyses show that the majority of these businesses were small-scale. It is forecast that in 2022 the retail industry will continue to record positive growth. According to the latest survey of Sapo Technology Company of 15,000 retailers who are customers of this enterprise, 46.7% of sellers believe that the retail market will recover; 14.5% of sellers expect to witness strong growth in 2022; and only 9.4% of sellers are pessimistic about the future business situation in 2022.
