The coming of giants

Uniqlo, the fashion retail giant from Japan, has opened a new store in central District 1 in Ho Chi Minh City on an area of ​​​​more than 3,000 m2, which is one of the largest Uniqlo stores in Vietnam. 

MUJI, a famous Japanese household brand, has opened its third store in Vietnam, which is located in Hanoi with an area of ​​about 1,700 m2. Other Japanese retail brands such as Ministop, FamilyMart, and 7-Eleven are expanding their operations in Vietnam.

Vincom Retail has also opened the 81st trade center - Vincom Mega Mall Smart City. It is expected that this year Vincom Retail will open three new trade centers, bringing the total retail floor area across the system to nearly 1.8 million m2.

According to a report recently released by Savills Vietnam, large retailers will expand their operation in Vietnam this year. Its survey shows that some international brands such as Bath & Body Works, Prima Donna and Sports Direct delayed their business plan in Vietnam in 2021 due to the Covid-19 pandemic but still plan to operate in Ho Chi Minh City and Hanoi. In 2022, new international brands such as Columbia, %Arabica, Ain & Tulpe, and 6ixty8ight will enter Vietnam.

This is the sign of recovery of Vietnam's retail industry after the Covid-19 pandemic.

In 2021, SK Group paid US$410 million to hold 16.26% of the shares of WinCommerce (the unit that manages the VinMart/VinMart+ supermarket/convenience store chain). In November 2021, SK Group continued to spend $340 million to acquire a 4.9% stake in The CrownX - the core of the Masan retail ecosystem.

The CrownX also received the attention of an investor group including Alibaba and Baring Private Equity Asia, when this group completed the purchase of 5.5% of the newly issued shares for $400 million.

Most recently, on December 13, investors including TPG, Abu Dhabi National Investment Fund and SeaTown Holdings, invested $350 million in The CrownX.

Not only quickly occupying high potential markets, Hanoi and Ho Chi Minh City, foreign corporates have reached out to first-class cities in Vietnam such as Hai Phong, Da Nang, Can Tho, Ha Long - places with a very large market space and almost unexplored. Meanwhile, H&M has opened two more stores in the cities of Ha Long and Can Tho.

In a survey in November 2021 conducted by CBRE on the need to expand stores of major brands in Asia in 2022, up to 65% of the brands questioned said there was a need to open more stores; 50% said they wanted to find better locations. More than half of the brands surveyed said they wanted to find shopping centers in the city center to open their stores and 48% said they wanted to find locations on main roads.

Challenges

According to the Vietnam Association of Real Estate (VARS), retail is Vietnam's most dynamic economic sector, which has maintained a double-digit annual growth rate for decades. In April 2022, Vietnam's total retail sales increased by 12.1% over the same period in 2021, a positive result compared to a decrease of 3.8% in 2021 due to the impact of the epidemic.

Pham Thi Thu Hien, Deputy General Director of Sales and Marketing of Vincom Retail, said the retail market has great potential for development in the future. According to the General Statistics Office, by 2030, Vietnam's population will grow to 104 million. The year 2022 is a very important one, which will see stiff competition among retailers. Consumer changes have forced the retail industry to adapt and evolve. 

According to Dr. Dinh Thi My Loan, Honorary President of the Vietnam Retailers Association, store closures due to the pandemic will still occur in 2022. Even when we return to the new normal, the rate of store closures may slow down, but there are still many stores that will suffer this sad outcome.

In addition, multi-channel sales including online channels (website, facebook, zalo...) and direct channels (stores, agents, supermarkets, etc.) have offered more meaningful shopping experiences. This model not only helps interactions with consumers on any technology device and platform, but also stimulates consumer shopping needs. Therefore, retailers need to quickly respond to this current requirement.

Facing new challenges, Vietnamese retailers have had to change. For example, Vincom Retail currently is focusing on research and development of new generation products. It plans to launch the new generation Vincom Mega Mall model, aiming to become Life - Design Mall - a destination for modern lifestyles.

Meanwhile, Masan said that its Mini Mall model will serve 30-50 million consumers in 2025. Since mid-2021, Masan has placed Techcombank stores inside WinMart+ supermarkets as well as Phuc Long, Reddi, and Phano Pharmacy kiosks. It aims to have 30,000 points of sale nationwide with an annual revenue of 7-8 billion USD, accounting for 50% of the retail market share in Vietnam.

Duy Anh