Vietnam"s retail market proves attractive for foreign investors

People shop at a supermarket in Hanoi. (Photo: VNA)

Hanoi - Vietnam is becoming an attractive retail market for companies all over the world with many regional and global FDI investors recently announcing plans to increase capital and expand distribution networks here.

According to the Ministry of Industry and Trade, the Vietnamese retail market is worth 142 billion USD and is expected to increase nearly 2.5 times to 350 billion USD by 2025.

In January, total retail sales of consumer goods and services decreased by 6 per cent on-month to more than 481.8 trillion VND (20.4 billion USD) due to weaker demand as many commodities were purchased ahead of the Lunar New Year. People spent more on festival activities post Tet, said the General Statistics Office.

However, it still rose 13 per cent year-on-year.

For the first two months of the year, the country’s total retail sales of consumer goods and services advanced 13 per cent over the same period of 2022 to over 994.1 trillion VND.

With stable and positive growth, the Vietnamese retail market has always been appreciated by foreign enterprises.

Thailand’s Central Retail Corporation (CRC) has recently announced a capital increase of 1.45 billion USD in Vietnam. This is the largest investment ever announced by CRC with the goal of doubling the number of stores to 600 in 57 of 63 provinces. In 2023, the company spent more than 4.1 trillion VND in the market, focusing on developing essential foods businesses, stabilising prices, and restructuring electronic stores.

Vietnam is the market, besides Thailand, that brings the largest revenue for the group, about 21-22 per cent of total revenue. Last year, the number was 25 per cent, said Olivier Langlet, CEO of Central Retail Vietnam.

One of the biggest Japanese retail companies, Aeon Co., Ltd is also accelerating the opening of shopping malls in the country to nearly three times to about 16 by 2025, focusing on the food segment.

Last month, Aeon Mall in Hue city was constructed on an area of 8.62 hectares, with a total investment capital of about 169 million USD. This is the biggest complex of trade centres and services in the region.

FDI is one of the important elements to help Vietnam transform itself into one of the most open economies in the region and grow quickly, according to a representative of HSBC Vietnam. Currently, regional and global FDI investors or multinational corporations contribute to more than 80 per cent of total export turnover from Vietnam and about 25 per cent of domestic investment value.

Research from HSBC showed that, by 2030, the Vietnamese domestic consumer market will outstrip Thailand, the UK and Germany.

“In 2023, we will see some multinational corporations in Asia showing their interest in Vietnam, engaging in retail, semiconductors, electronics, mobile components, plastic, renewable energy, and logistics industries. They are looking for ways to expand or make new investments in Vietnam,” said the representative.

Retail businesses optimistic in face of erratic environment The decrease in purchasing power due to the belt-tightening of consumers has seriously affected the business situation of most retail businesses. However, many businesses are still very optimistic about the market’s prospects and believe that the new strategy will help them settle down soon.

Thai largest retailer to pour over 1.4 billion USD in Vietnam Central Retail Corporation (CRC), the largest retailer of Thailand, has announced its biggest investment in Vietnam at 50 billion baht (1.45 billion USD) in the 2023-2027 period to accelerate its market presence in the country.

Adjusting the direction of retail strategies Consumer shopping behaviour has changed since the pandemic, prompting major retailers to align their business strategies to be consistent with the changing situation.

Retailers enter the AI game to improve customer services After fintech and technology, the retail sector is seemingly joining the race to utilise AI race after a number of businesses announced plans to develop and integrate this technology into their operating models.