Momentum created for retail market

Some companies are opening new stores, while other are aiming to increase product numbers

In a 2024 strategy report published by MSB Securities last week, retail is predicted to bounce back, leading the entire market and creating growth momentum for other industry groups.

MSB Securities forecasts that the retail industry will record double profit growth in 2024 and may continue to grow by 42 per cent in 2025, but there will be differentiation in each segment. The report noted that consumer goods retail continues to maintain favourable growth momentum. Profits in electronics retail are predicted to triple on average, and purchasing power for non-essential goods is expected to recover by the end of 2024.

Furusawa Yasuyuki, general director of AEON Vietnam, predicts that the retail chain will continue to grow in revenue and profit in 2024, but the growth rate will not reach a huge level.

AEON struggled to achieve its goals in 2023 after growth of up to 20 per cent in 2022. However, the retailer is still confident that it can accelerate growth as expected with continuous improvements.

“Cheap prices are not AEON’s top priority,” Yasuyuki said. “We will focus on improving and upgrading sales areas, increasing private label products made in Vietnam according to Japanese standards at reasonable prices, and promoting the Everyday Low Price programme to stimulate demand.”

Currently, AEON Vietnam is coordinating with suppliers to periodically offer products with the best prices to customers. In addition, the Japanese retailer is developing omnichannel sales and e-commerce services at all its department stores and supermarkets for the diverse needs of customers.

Meanwhile, Japanese fashion retailer UNIQLO ended 2023 relatively successfully, with the number of stores quadrupling compared to its first launch in the Vietnamese market at the end of 2019. It now operates 22 stores in four cities and provinces across the country, as well as an online store.

“Four years of presence in Vietnam has been a wonderful journey for UNIQLO. We will further improve product quality, provide the best shopping experience, and commit to contributing to the long-term development of Vietnam,” said Nishida Hideki, general director of UNIQLO Vietnam.

In addition to expanding its retail store system, UNIQLO is striving to increase the proportion of Vietnamese-made products at domestic stores by more than half, prioritising customer experience such as implementing automatic payment counters, promoting online sales, and community support activities.

Meanwhile, pharmaceutical retail chains have also gained advantages from the ability to open new stores and control sales costs.

FPT Retail, the owner of consumer electronics chain stores FPT Shop and pharmacy chain Long Chau, has launched a plan to shorten the profit gap between the two business areas.

Last year, the FPT Shop chain showed signs of bottoming out in profits when consumer demand dropped and the price reduction war among electronics businesses lasted throughout the first and second quarters of 2023, causing FPT Shop to suffer losses of about $85,000.

Meanwhile, Long Chau Pharmacy has ample room for expansion and increased profits, and is expected to be the main growth driver for FPT Retail. The pharmacy chain currently has nearly 1,500 stores, accounting for 55-60 per cent of market share, with monthly profits of about $126,000.

In 2023, FPT Retail recorded accumulated consolidated revenue of $1.34 billion, up 6 per cent over the same period last year. However, due to the impact of a price war involving FPT Shop, FPT Retail is estimated to still have after-tax losses of $95.8 million.

An FPT Retail representative confirmed that the business plans to open up to 450 new Long Chau outlets per year in the next two years.

“In contrast, the retail chain plans to improve the gross profit margin of the FPT Shop electronics chain in 2024 thanks to increasing the proportion of smartphone and other home appliance brand products compared to iPhone products,” he said.

The representative added that FPT Shop is unlikely to open new stores in the near future, due to the market being saturated.

Retail arena maintaining its promise As retailers expand their presence or forge stronger ties with Vietnamese suppliers, there is growing consensus about the untapped promise of Vietnam’s retail landscape.

Retail bets on festive consumer rush Increased consumer demand at the end of the year has opened up the prospect of recovery for retailers after a gloomy business year.