EPISODE 1: OVERVIEW OF VIETNAM’S

RETAIL MARKET

Vietnam’s Retail Market

I. THE ATTRACTIVENESS OF
100
VIETNAM’S RETAIL MARKET 95
90
85
Vietnam owns an extremely potential 80
Malaysia
Country Risk (Economic and Political)

retail market, valued at US$127.7 billion in 75

70 Indonesia
(0 = high risk, 100 = low risk)

2017 and ranked 6th in the Global Retail 65 Thailand

60
Development Index (GDRI). At the same 55
time, the market has grown quite stably in 50
45 Philippines
recent years, and is expected to reach 40 Vietnam
35
10.3% per year in the period 2018-2020. 30
Though the market size is relatively small, 25
20
a fast and stable growth rate 15
10
demonstrates the current attractiveness 5
0
of this market with low level of saturation.
25 30 35 40 45 50 55 60 65 70 75 80
Country Potential
There are many factors contributing to the
(0 = low potential, 100 = high potential)
development of Vietnam's retail market, Note: The size of the circle shows the value of a country's retail industry
such as the growth of the middle- income
class in society. Expected to reach 44 CHART 1: GLOBAL RETAIL DEVELOPMENT INDEX IN 2017
million people by 2020, they tend to (Source: A.T.Kearney, General Statistics Office of the countries)
prefer high quality goods and have higher
shopping experience expectations. In
addition, since 2013, the confidence index
of Vietnamese consumer has increased,
175.1
hitting the peak of 94.9 in H1 2016, and is
forecasted to continue to be stable at a 130.5
118.6
97.3 106.8
high level in the near future. Finally, more 87.3
and more foreigners have come to live and
work in Vietnam, translating to a more
diversification of goods offered, creating
opportunities for foreign products to 2013 2014 2015 2016 2017 2020
enter the market.
CHART 2: VIETNAM’S RETAIL MARKET VALUE, 2013-17F
(Source: General Statistics Office)
II. COMPONENTS OF VIETNAM’S RETAIL MARKET
The retail market in Vietnam is divided into three main channels: Traditional Retail, Modern Retail and E-commerce. Since e-
commerce has been analyzed by Ipsos BC in the previous issues, this period will focus mainly on Traditional and Modern
channels.

Chart 3: Vietnam’s Retail Channels. Source: Speeda

Chart 4: The retail market value in Vietnam, 2015 –

In general, traditional channels including markets and 2020f. Source: Speeda, Ministry of Industry and Trade
grocery stores are still the two most popular
consumption channels for Vietnamese consumers,
mainly due to daily shopping habits. However,
modern shopping channels are accelerating strongly, 32% 25% Traditional Retail
especially in big cities such as Hanoi and Ho Chi Minh 45% 68%
Modern Retail
City. Ministry of Industry and Trade forecasts that by
55%
2020, modern retail will account for 45% of the total 75% Notes:
Inner circle: 2015
retail value of the country. Middle circle: 2017
Outer circle: 2020

III. IPSOS BUSINESS CONSULTING’S VIEW

In general, Ipsos BC believes that Vietnam's retail market will continue to grow rapidly in the future, with the
tendency of shopping to gradually shift to modern channels. This growth will have a strong impact on grocery
merchants and large firms:

• Small businesses and small grocery store owners should be prepared for the challenges from the continuous
increase of convenience stores. To cope with this situation, Ipsos BC supposes that grocery stores could consider
franchise models to connect with large corporations, or switch business models to avoid direct confrontation with
convenience stores coming from retail groups which are strong in capital.

• Enterprises are able to grasp this opportunity to quickly step into Vietnam's retail market with low saturation.
However, it should be noted that the level of competition in the market is currently quite high, with large corporations
that are competing fiercely in terms of land lease.

Coming up next - Part 2: The competition between tradition and modernity in the market