VietNamNet Bridge – A lot of enterprises in the fields of real estate, finance & banking, consumer goods have suddenly jumped into the retail market.

Vietnam once witnessed the wave of making investment in the real estate sector, which was considered a gold mine for investors to exploit. And now it is witnessing the investment wave in the retail sector.

Everyone wishes to become a retailer

Ocean Retail, a subsidiary of Ocean Group, has recently opened the fifth Ocean Mart in Hanoi. The company is implementing an ambitious plan on setting up 70 supermarkets by 2015 and becoming one of the biggest supermarket chains in Vietnam.

Son Ha Group has recently inaugurated the second Hiway in Hanoi in its hypermarket chain, while having confirmed that it would have 20 hypermarkets nationwide in the next five years.

Analysts have noted a new wave of investment in the retail sector. Not only existing retailers try to expand their networks, but the enterprises in other business fields also consider jumping into the retail market.

International analysts all say Vietnam is a retail market with great potentials thanks to the high population, developed economy and increased living standards. Meanwhile, the modern distribution channel remains underdeveloped, which only makes up 20 percent of the total retail turnover.

It is now the right time to set up and expand retail networks, even though the national economy is experiencing dark days. The total retail turnover of goods and services in 2012 still reached VND2,320 trillion, increasing by 16 percent over 2011. This means that the retail sector in Vietnam is still very promising and attractive, despite the economic recession.

One of the reasons that prompt Vietnamese investors to the retail sector is that they have been encouraged by the big achievements gained by existing retail chains.

Foreign retailers have been very succeeding in Vietnam. Big C Thang Long in Hanoi alone has the turnover of $20 million a year.

Vietnamese investors rush to develop their retail chains at this moment also because they believe they need to do this now, before more and more foreign retailers come to Vietnam as the domestic market is open now to the world under the WTO commitments.

It’s a hard nut to crack

Analysts have noted that most of the new investors in the retail market are originally real estate firms. Therefore, they have every reason to believe that the firms, which have property projects unsold in the context of the frozen real estate market, decided to turn their unsold products into retail premises.

The analysts have warned that inexperienced retailers may meet a lot of challenges in the market. Domestic investors, with limited capital, would not have big opportunities to cooperate with suppliers to develop products. As the domestic run supermarkets are not big, they would not place big orders with suppliers to be able to get best prices.

Modern distribution industry requires professional logistics, which only foreign retailers have. Metro Cash & Carry, for example, has spent Euro20-25 million since the day it arrived in Vietnam on the supplying system (cold storage, specialized vehicles, examination equipments…). Meanwhile, domestic investors, with limited budgets, cannot develop their material growing areas and the logistics system to ensure the stable goods supply sources.

Tran Thuy