The competition in the domestic retail market is heating up as both local and foreign retailers are making plans to launch new outlets, while some retailers have even been taken over by others, according to Thanh Nien newspaper.

Inside a supermarket in District 3, HCMC. The competition in the local retail market is getting stronger 

Following in the footsteps of Maximark, Ocean Mart and Metro AG, Fivimart has dissolved its operations in the local retail market after its takeover in early October by VinCommerce, the consumer retail unit of Vingroup.

According to VinCommerce, the deal will help the firm expand its retail network. VinCommerce is now Vietnam’s largest retailer, with some 100 VinMart supermarkets and 1,400 VinMart+ convenience stores. It expects to raise these figures to 200 and 4,000 by 2020, respectively.

Meanwhile, the Saigon Union of Trading Cooperatives (Saigon Co.op), another domestic retail giant, has inaugurated a new Co.opmart supermarket in the Mekong Delta province of An Giang. Saigon Co.op currently has 99 Co.opmart supermarkets nationwide, and will this year open four to five more Co.opmart and Co.opXtra supermarkets and 10 Co.op Food convenience food stores in HCMC and Hanoi.

In addition to domestic retailers, foreign retail firms operating in Vietnam also have plans to expand their scales. In mid-November, Thailand’s Central Group, which owns the BigC supermarket chain in Vietnam, opened the GO! My Tho commercial center in My Tho City, Tien Giang Province. The group had earlier announced plans to inject an additional US$500 million into Vietnam to launch 500 new retail outlets in the country over the next five years.

Meanwhile, other giant retailers have set ambitious targets. Japan’s Aeon Group expected to have 20 Aeon supermarkets in Vietnam by 2025, while South Korea’s Lotte Group is aiming for 60 Lotte Mart supermarkets in the country by 2020.

As for the convenience store segment, VinMart continues its dominance. Mobile World Investment Corp., also known as The Gioi Di Dong, has set a target to increase the number of its Bach Hoa Xanh food stores to 500 by the end of this year from the current 405.

Further, both newcomers 7-Eleven and GS25 have plans to open thousands of convenience stores in Vietnam over the next decade. The number of Family Mart outlets is expected to surge to 700 by 2020 from the current 130 outlets.

Consulting firm A.T. Kearney has placed Vietnam in the sixth position on the 2017 global retail development index.

Despite the strong growth of retailers, modern retail channels have accounted for only a quarter of all contribution channels in Vietnam. The local retail market still has potential, said Vu Vinh Phu, chairman of the Hanoi Supermarket Association.

However, manufacturers are finding it hard to supply their products to supermarkets because of the supermarkets’ high discount rates, up to 30%-40%. The shortcomings of the distribution system have made the prices of locally made products less competitive than those of imported goods, Phu added.

SGT