VIETNAMVIEW
Vietnam’s
changing retail
environment
By Tielman Nieuwoudt
While Vietnam is no longer the flavor of the month, indicators
suggest that retail growth holds similar promise as it does for
China. The challenge in Vietnam is getting consumers to switch
their buying habits from wet markets to retail stores.
etail developments brands coming to the market. She notes
The Vietnamese retail that a number of Asian franchises have en-
market has seen significant tered the market. However she mentions
changes in the last couple of that for some big international brands it
years. Neighbourhoods in Ho Chi Minh will take time to enter the market as they
City and Hanoi have been transformed struggle with regulatory issues. Dutz also
as Vietnamese shoppers demand more notes that there is a trend towards mod-
from their retailers and retail experience. ern trade and convenience shopping. How-
However, even when compared to other ever, he questions whether retailers have
major Asian economies, the retail market yet found the right model for Vietnamese
remains in its infancy with a great potential convenience shopping. “It is important ern trade and research shows that people
for growth. Despite the current economic that convenience marts get the assort- are not willing to travel far for products
downturn, the retail market remains at- ment right and make people want to go and services”, said Owen. “However, with
tractive. “Double digit growth is attractive there. Currently it is not that attractive for time and planning, all of this can be over-
in any market”, notes Eckart Dutz, Manag- Vietnamese consumers”, Dutz explains. come, just like any other markets in Asia”,
ing Director of Cartridge World. “I don’t “For most Vietnamese consumers, conve- she continues.
see the current global economic downturn nience shopping already exists, it is just a
as a major barrier for sustained growth”, traditional model.” Focus on Tier One
he says. “The retail sector will continue to Trung Thu Luong, National Sales Man- In a number of growing emerging mar-
grow just like any other market as the Viet- ager for La Vie mineral water, notes that kets, a lot has been made of the growth
namese consumer searches for a more even though modern trade is growing for potential of tier two and three cities. How-
specialized shopping experience”, he package goods companies, traditional ever, compared to China and India, the
continues. Beth Owen, General Manager trades will remain a dominant force. Beth focus for Vietnamese retailers remain tier
of Indochina Research, mentions a recent Owen supports this view. “We are still see- one cities. Phi Van Nguyen notes that living
retail interview her company conducted in ing growth in traditional trade and the retail standards outside of Ho Chi Minh City and
Vietnam. “There is still a lot of optimism market remains highly fragmented”, she Hanoi are still low. “Even in tier two cities
and many retailers expect an upturn within says. Owen mentions that there is still a the market is just not big enough for more
the next six months.” perception in Vietnam that modern trade is than one big retail complex,” she explains.
Phi Van Nguyen, Managing Director of the shopping place for the upper classes, However, she mentions that her company
the Future Sense Group who brought in- with higher prices than traditional trade. has developed a clear growth plan for the
ternational brands such as Gloria Jeans She notes that some aspects of traditional six major cities in the country.
Coffee and Yogen Fruz to Vietnam pre- trade have changed little and that consum- David France, Managing Director, Dis-
dicts that as the retail market continues ers continue to shop at wet markets. “The tribution Division of Highlands Coffee
to grow we will see more international structure of the city is not friendly to mod- mentions that the focus for most retailers
40 JULY/AUGUST 2009
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