South Korean retailers extend reach

July 12, 2023 | 15:00
(0) user say
South Korean companies are showing significant interest in Vietnam’s flourishing retail sector, seeking to seize opportunities presented by the nation’s robust economic growth and sizable working-age population.
South Korean retailers extend reach
Next month will see the opening for a brand new Lotte shopping centre in the capital, photo Le Toan

Leading the charge is Lotte Group, one of South Korea’s top retail giants, which has emerged as the most active player in the market. Presently, the conglomerate boasts 20 affiliates operating in Vietnam, including prominent names like Lotte GRS, Lotte Shopping, and Lotte Culture Works.

Lotte Shopping, in particular, is set to inaugurate Lotte Mall West Lake Hanoi in August, after investing a substantial sum of $250 million. This ambitious project, Vietnam’s largest shopping mall complex, will also feature a hotel and office spaces.

Additionally, Lotte Group plans to inject around $900 million into the establishment of Thu Thiem Eco Smart City, a multipurpose complex encompassing a shopping mall, hotel, offices, residential buildings, and a cinema. Hanoi will welcome the opening of the Lotte World Aquarium in August as well.

According to Vietnam’s Ministry of Industry and Trade report in April, the domestic retail sector presently boasts a market size of $142 billion. Moreover, the retail sector is poised to expand significantly, reaching $350 billion by 2025, thereby making a substantial contribution of 59 per cent to the country’s GDP.

“Over the past two decades, the Vietnamese retail market has grown about a hundredfold. With its youthful demographic and ardent interest in South Korean cuisine, K-pop, and K-drama, Vietnam stands as an appealing business destination,” said a Lotte Shopping official. “At our soon-to-be-unveiled Lotte Mall West Lake, we are committed to offering young consumers an immersive cultural experience through diverse offerings such as a yoga space, handicraft workshops, and a bookstore.”

Another major player, Shinsegae, is poised to expand its footprint in Vietnam by opening a third Emart store in partnership with Vietnamese conglomerate THACO Group through subsidiary Thiso during the latter half of this year, under a master franchise agreement.

In late 2021, Thiso concluded the agreement to transfer ownership and exclusive business rights with Emart from South Korea.

Looking ahead to 2026, Thiso aims to expand its network to 14 locations across the country, spanning from the northern to the southern regions. The company aspires to become a top retail and service conglomerate, with Thiso Retail-Emart Vietnam aiming to secure the number one market share in Vietnam’s retail sector.

The total revenue for the Emart Vietnam chain in 2023 is projected to reach $133.3 million, up 60 per cent on-year.

GS Retail has already introduced over 200 GS25 convenience stores across the Southeast Asian nation. The company’s local joint venture anticipates further business expansion in Vietnam through an investment contract with the International Finance Corporation inked last month.

In March, Y-Mart, another South Korean retail corporation, held discussions with the authorities of the central province of Nghe An.

Seongjin Kim, CEO of Y-Mart, said that the retailer was currently exploring investment opportunities in Nghe An, particularly in the kitchenware products manufactured by Hong Son Trading and Manufacturing, as well as in clean agricultural products such as fruit, vegetables, and dried squid, among others.

The company is also considering exporting South Korean products, such as grapes, to the Nghe An market. Hence, Y-Mart hopes to establish a legal entity there to enhance import-export activities, draw investment, sign contracts, and secure the first orders with its local partner.

In addition to retailers expanding their presence in Vietnam, some renowned South Korean brands are also forging partnerships with international retailers to enter the Vietnamese market.

Amore Pacific Group, the renowned cosmetics giant, on June 27 entered into an initial agreement with international health and beauty retailer A.S. Watson Group to bolster its global business endeavours. This strategic alliance is set to enhance Amore Pacific’s global business ventures, and experts forecast that Vietnam could emerge as a pivotal market for this partnership.

The MoU is expected to solidify a mutually beneficial cooperation between the two entities, with a primary focus on nurturing the growth of Amore Pacific’s esteemed brands already present within A.S. Watson’s platforms, including highly sought-after labels such as Innisfree and Etude, or new brands like Illiyoon and Aesotura.

With Watsons already establishing a presence in key Vietnamese cities such as Hanoi and Ho Chi Minh City, this offers an advantageous opportunity for South Korean brands to extend their reach and effectively engage with a wider customer base in Vietnam.

South Korean DB Insurance acquires 75 per cent stake in Saigon - Hanoi Insurance Corporation South Korean DB Insurance acquires 75 per cent stake in Saigon - Hanoi Insurance Corporation

DB Insurance continues its expansion in the Vietnamese insurance market with the acquisition of a 75 per cent ownership stake in Saigon - Hanoi Insurance Corporation (BSH), following its recent deal to acquire Aviation Insurance, positioning itself as a major player in the industry.

South Korean giants to pour billions of dollars into Vietnam South Korean giants to pour billions of dollars into Vietnam

More than 100 MoUs were signed by South Korean and Vietnamese businesses at the Vietnam-South Korea Business Forum on June 23.

Trends and opportunities for brands and retailers Trends and opportunities for brands and retailers

Vietnam is one of the five key markets in Asia-Pacific that hold growth potential for brands and retailers, with a strong preference for domestically produced goods. Helen Sac, consultant director for Asia-Pacific at consumer insights firm WGSN, talks to VIR’s Linh Le about emerging trends.

Retailers ramp up promotions to boost sales Retailers ramp up promotions to boost sales

As consumers are tightening their budgets, retailers are initiating a broad range of promotions to boost sales.

By Luu Huong

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional