4 major trends of Vietnam’s distribution and retail channels
With a population of nearly 100 million, the country’s final consumption expenditure has been maintaining at a high rate of over 70% annually, indicating huge potential remains for the market.
Fierce competition in Vietnam’s distribution and retail channels has created four major trends in the market, said an expert.
Overview of the conference. Source: Ngoc Thuy.
|
With a population of nearly 100 million, the country’s final consumption expenditure has been maintaining at a high rate of over 70% annually, indicating huge potential remains for the market, Phu added.
Others factors that contribute to the attractiveness of Vietnam’s distribution network and retail market include young people accounting for 50% of the population, the nearly-untapped market in rural areas, and modern trade channels holding 25% of the market share.
Total goods retail sales and service revenue expanded at a double digit rate in recent years, but “the online retail market only accounts for 5% of total revenue,” Phu stressed.
Illustrative photo.
|
Firstly, there have been growing M&A activities in the retail sector in the last four or five years, which help create large scale retail corporations with high competitiveness in the market. Some of notable M&A deals are Central Group's acquisition of the Big C super market chain for US$1.05 billion in 2016; Vingroup acquiring Fivimart and Shop & Go; Saigon Co.op taking over French retailer Auchan’s Vietnam operation, among others.
These major retail corporations in Vietnam are expected to have major influence on the country’s market, while the competition would become fiercer. Under this circumstance, small retailers with limited corporate governance, professionalism and inefficient business models are subject to M&A, bankruptcy or losing their brands on the market.
Illustrative photo.
|
On the contrary, super markets and malls that serve a certain customer segment and fail to learn the importance of customer shopping experience are subject to closure. Parkson and Auchan are some notable names in this case.
Thirdly, the growing number of centers specialized in purchasing agricultural products and food across the country. Major retailers are focusing on setting up their own purchasing center as part of the distribution network. Through these centers, retailers are able to control products quality, ensuring the uniform standards applying to harvesting and storing processes, leading to competitive products prices and a foundation for later export.
Metro Cash & Carry was the first retailer following that trend, and now Thailand’s Central Group, Aeon, Vingroup, Saigon Co.op also set up their respective purchasing and quality control centers in provinces and cities having advantages on agricultural productions.
Illustrative photo.
|
However, e-commerce activities in Vietnam are facing difficulties in terms of regulations during the development process, of which the main issue is the lack of measures to control quality of product sold online. As a result, there have been retailers providing services both online and through brick – and- mortar stores. For example, retailers could advertise their products online but deliver the products and receive payment right at their stores.
Omni channels are considered an inevitable trend for Vietnam’s retail market, however, there remain issues in state governance of this promising distribution channel in Vietnam.
15:34, 2024/11/27
Big discounts on offer at Hanoi's November Promotion Festival
The event is part of the Hanoi Concentrated Promotion Program 2024, held in May, July, and November, attracting up to 2,000 businesses.
17:23, 2024/11/26
Hanoi unveils 150 most popular Vietnamese products and services for 2024
The "Most Popular Vietnamese Products" voting program is part of the city's broader efforts to encourage the consumption of local goods.
16:50, 2024/11/23
Hanoi hosts the Vietnam Regional Specialties Fair 2024
This year's fair will contribute to the promotion of trade and the expansion of typical regional products, especially agricultural and food products that meet export standards.
14:06, 2024/11/20
Hanoi strengthens export competitiveness and trade protection measures
Hanoi will work with the Ministry of Industry and Trade to ensure that businesses and manufacturers are ready for new challenges.
10:49, 2024/11/16
US reiterates Vietnam is not manipulating currency
The US Treasury Department’s positive evaluation underscores Vietnam’s progress in balancing its economic and monetary policies while fostering strong bilateral relations with the US.
21:14, 2024/10/31
Vietnam, Brazil: Building bridges through shared history and new partnerships
Vietnam and Brazil are forging a future of mutual development, bridging continents through their shared history and new partnerships.
- Hanoi to attract tourists by showcasing local specialties at wholesale markets
- National E-commerce Week, Vietnam Online Shopping Day 2024 set to kick off
- Vietnamese goods in rising demand among Hanoi residents
- Hanoi unveils 2024 rural industrial plans
- Hanoi advances supporting industries for hi-tech services
- Vietnam’s economy remains resilient amid global uncertainties: ADB