Retail sales growth slows due to inflation

illustration photo

Compared to previous months, May saw the lowest increase in sales value, according to the Domestic Market Watch Board run by the Ministry of Industry and Trade.

The total retail sales value during the first five months of 2011 reached VND762.7 trillion ($36.3 billion), an increase of 22.5 per cent over the same period last year. Considering inflation, the value rose by only 6.4 per cent, however.

The board attributed the slower pace of retail sales to high inflation, which has caused consumers to cut spending. Increased commodity prices have also caused sales volumes to fall.

During the first five months, commercial sector revenue, which accounted for nearly 80 per cent of the nation's total consumption revenue, rose by 23.6 per cent in comparison with the same period last year.

Last year, the country's total retail sales value of goods and services jumped by 24.5 per cent to VND1,561 trillion ($74.3 billion) against the previous year.

Modern retail chains currently account for 20 per cent of distribution in the country. This level is low compared with regional countries. However, experts have predicted this figure will grow to around 31.2 per cent by 2015.

Managing Partner at Athena Retail Consulting Vu The Du said that there still remained a multitude of investment opportunities in Vietnam, especially throughout its untapped rural areas.

"Whilst rural sales have grown by 30-40 per cent annually, retail sales in rural areas, housing 74 per cent of the country's population, still provide major investment potential," Du said.

The retail industry annually contributes more than 15 per cent of the country's gross domestic product (GDP) and employs more than 5.4 million workers, representing over 10 per cent of Vietnam's total workforce.