Developing large-scale outlet malls in Hanoi would boost manufacture and sale in the context of the stagnant economy and trade activities as the results of  Covid-19, according to Hanoi authority. 

Jockey outlet in Chua Boc street. Photo: Le Nam

Though factory stores are popular to shoppers in the US, Europe and other countries. Hanoi, home to major garment and textile businesses, has still not seen any large outlet mall. Hanoi Party Secretary Vuong Dinh Hue recently asked the city’s authorities to consider developing factory stores and lure investment in large-scale outlet malls. 

Being of the same opinion, President of the Vietnam Association of Retailers Vu Thi Hau, said that factory stores would benefit both businesses and consumers. "Although the items sold at the point of sale are mainly outdated or with minor defects, they are from well-known fashion brands and could be sold at prices between 30% and 80% cheaper," she said. "Many customers still prefer defective items sold in factory stores because of their cheap price but good quality."

In Hanoi, the first outlet stores were open in 2012 but then closed after the short time in operation. Mr. Nguyen Van Hai, owner of an outlet shop in Chua Boc street, Hanoi, who had given up selling defective branded fashion said that most of the items were 50% to 70% cheaper than the price of the fine items. However, he had to struggle to compete with other fashion stores by offering many promotion programs such as discounts and gifts, leading to no profit.

An outlet in Vincom Royal City. Photo: Hoai Nam

The reason why the outlet stores could not survive is the lack of diversification. The outlet shops only sell items of one or brands and such poor offer is not appealing to customers, Deputy Director of the Domestic Markets Department under the Ministry of Industry and Trade Le Viet Nga said. In addition, misunderstanding about the outlet business model has led to loss of interest among Vietnamese consumers, she added.

Local retail expert Vu Vinh Phu added that Vietnamese people prefer to buy fashion brought from abroad, although the origin and quality are sometimes not as verifiable as that of outlet products sold in Vietnam. 

Managing Director of CBRE Vietnam Marc Townsend said that for outlet stores to be successful, there should be large outlet malls with cheap rental space.

"If businesses choose to invest in small outlets in prime locations of Hanoi, it will reduce business efficiency and it is difficult to stay firm,” Mr. Townsend said.