Asian retailers eying up tasty Vietnam

Foreign retailers’ interest in Vietnam is in step with the nation’s increased standard of living

“The retail market in Vietnam offers potential for growth, which can be accelerated if the market is liberalised,” a spokesperson for Singapore-based CapitalMalls Asia told VIR.

“CapitaMalls Asia is open to exploring a shopping mall in Vietnam as part of an integrated development with CapitaLand, if any interesting opportunities arise,” the spokesman added.
CapitaMalls is the retail arm of its parent CapitaLand, which is now developing many housing projects in Vietnam.

Other larger retailers from Malaysia, Japan and Korea, among others, are lining up to get a slice of Vietnam’s retail pie. Firms include E-Mart, Aeon, Giant, Lotte and Parkson. In September 2011, Korea’s Lotte Mart announced it would pour another $50 million into Vietnam and open a third supermarket. This firm plans to open 30 supermarkets and plazas in Vietnam by 2018.

Meanwhile, Korean retail brand E-Mart has joined hands with U&I Corporation in Vietnam as it pushes to open 52 supermarkets, stores and distribution centres with total investment capital of $1 billion by 2020.

Vietnam’s retail sector is also heating up with participation of Japanese retailers. Familymart, in association with Phu Thai Group, will open about 300 stores in the country in the next three years. In addition, Hong Kong’s Dairy Farm just opened its first supermarket in Vietnam. Aeon, another Japanese convenience store brand, also plans to enter the Vietnam market in 2013.

“Japan is a powerful country in convenience stores. When strong brands in this field penetrate Vietnam, demand for retail sites in central areas will increase,” according to Laszlo Fulop, associate director of retail services from CBRE  in Ho Chi Minh City.

“Vietnam is still a destination with a positive outlook for international retailers In fact, when it comes to profits, retailers look at the country as one of the more lucrative markets in the world,” Fulop told VIR.

“We see positive signs and trust from these international retailers. It is not entirely correct to say that Vincom Centre is facing big difficulties in finding tenants — maybe [it is difficult] to find sufficient number of qualified tenants that enhance the overall selection,” the CBRE analyst said.

 “It is good time for these tenants this year, since they can achieve good conditions and gain market position at a lower cost. Most importantly there is now a choice of location,” he added.
Meanwhile, for local retailers, Vinatex announced it would open 200 new stores in the next few years and N&M remains aggressive on expansion.

Fulop said that retail spending was suffering in the wake of the average 20 per cent inflation and large customer groups had cut spending and bought relatively more essential goods.

“These retail projects will succeed in this environment only by realistic offers with incentives, differentiation, careful anchor tenant selection, and marketing,” added the retail analyst.

According to Colliers International Vietnam, the compounded annual retail growth rate of Vietnam in the period 2008-2012 was about 13.6 per cent with cosmetics and toiletries, clothing, footwear, furniture and electronics having the highest sales growth rates in Vietnam.