Vietnam's retail sector faces mounting challenges

On September 22, Vietnam Report unveiled its annual list of the Top 10 Credible Retail Companies for 2023. The rankings, reflected an industry grappling with significant challenges of considerable interest to investors and stakeholders.

Since the fourth quarter of 2022, Vietnam’s retail sector has witnessed subdued growth.

Profits have been under strain thanks to subdued demand stemming from a dip in public incomes due to export challenges. Additionally, many retailers are navigating the complexities of high interest rates and stringent credit conditions set by consumer finance entities.

The fresh survey conducted by Vietnam Report highlighted that almost all businesses (100 per cent) cited weak consumer demand as a concern, with 92.9 per cent noting the persistent economic slowdown. Early 2023 also saw retailers facing fierce price competition, further straining profits.

To combat this dip in consumer spending, nearly 64 per cent of retailers plan to launch consumer incentive programmes, adopt competitive pricing strategies, and introduce loyalty schemes in the upcoming months. However, not all promotions guarantee success.

Many businesses are therefore leaning into market research, utilising technology and data to better align their marketing strategies with consumer preferences.

Despite current headwinds, Vietnam's retail sector remains robust in potential. Many businesses view the solution to the current challenges in deepening market penetration, streamlining operational costs, and reducing expenditures on underperforming outlets.

Looking ahead, the retail landscape seems promising. The current market valuation stands at $142 billion, with projections estimating a surge to $350 billion in the near future.

One silver lining for the sector is the return of international tourism to Vietnam. As global travel restrictions ease, the influx of tourists is likely to provide a welcome boost to retailers.

Moreover, Vietnam's demographic advantage, with its young and large population, further augments the sector's potential growth.

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