|Socar Mall in Thu Duc city is scheduled to open in the first quarter, but now is still in delay. Photo: Le Toan |
Amid the long social distancing, almost all retail centres have been closed for the past few weeks, with many utilising this time to repair and renovate their spaces.
In Hanoi, the lockdown has also delayed the openings of several malls such as Vincom Mega Mall Smart City in South Tu Liem district, which may be opened at the end of this year, six months after the original schedule.
In Ho Chi Minh City, the retail real estate market was predicted to see 170,000 square metres of new floor area come online in 2021. However, only Co.op Mart Truong Chinh in Tan Phu district was opened with 16,000sq.m in May.
Plans for new retail centres in 2021, including the Socar Mall in Thu Duc and other neighbourhood shopping centres, are also unlikely to meet required occupancy rates for a launch. Many projects have also delayed construction or opening, even after finishing construction work.
In addition, the latest outbreak and ensuing social distancing policies have limited new retail lease transactions as both landlords and tenants are waiting for the situation to improve.
The market’s bright spot in 2021 was the opening of a 3,000sq.m centre by French sporting goods retailer Decathlon at Vincom Mega Mall Thao Dien in April and the latest outlet of UNIQLO in May.
Meanwhile, domestic brands are struggling under financial pressure, with revenues depending solely on domestic demand.
Due to lockdowns, it is unlikely that there will be any additional retail projects coming into operation by the end of the year. In addition, the pandemic is also delaying the entry and expansion of other international brands in Vietnam.
According to CBRE Vietnam, 2019 saw the highest number of new retailers arriving in Vietnam, with more than 30 new entrances. The figure was 15 in 2020 and was expected to be 18 for the whole of 2021. However, so far, only some of them such as Robin May, Garmin, and Tory Brunch have actually entered the market so far.
In Hanoi, the most noteworthy transactions in 2021 included brands like premium automobile supplier Jaguar Land Rover, which opened its first experience studio in Trang Tien Plaza in May and South Korean fashion brand Hazzys that set up a new store in Vincom Ba Trieu in June.
In the first months of 2021, most tenants were optimistic and continued to show demand to expand store networks in Ho Chi Minh City, mainly targeting October-December to keep up with the peak festival season.
However, due to the pandemic situation turning worse since the beginning of June, many shops and malls remain closed and wait for permission from the government to reopen.
Retailers are expected to take at least three months to recover after the social distancing, and at least a year to get back to stable operation, according to Savills.
Despite the difficulties, many retailers are laying plans to develop through e-commerce in Vietnam and abroad.
In Ho Chi Minh City, increasing vacancies now allow brands that could maintain stable finances to take up positions that were previously highly contested.
Spots on the prime retail streets of Ho Chi Minh City such as Nguyen Hue, Dong Khoi, and Ho Tung Mau are offering rental prices at 30-50 per cent discounts compared to early 2020.
Meanwhile, others are making strategic investments and partnerships to beef up their retail offering once the economy recovers. For instance, Masan has bought a 20 per cent stake in the Phuc Long coffee and tea chain to set up more than 2,200 kiosks at VinMart+ convenience stores.
Nova F&B, a subsidiary of Nova Group, has also entered a cooperation with the Mango Tree brand after partnering with JUMBO, Crystal Jade Palace, Gloria Jean’s Coffee, and other brands.
Small businesses, on the other hand, are focusing on streamlining operations and cutting operating costs while shifting to e-commerce to retain some revenue.