The number of retail sale points has increased rapidly in the last few years. Of these, shopping malls have been growing by 11.3 percent per annum in CAGR (Compound Annual Growth Rate). Meanwhile, the development of traditional markets is slowing down, at 0.9 percent per annum.
Since January 2015, 100 percent foreign owned retailers can be established in Vietnam. 100 percent of import tariff lines, i.e, nearly all import products, have been lifted since 2018.
The M&A wave in the retail industry in early 2016 has become stronger in recent years. According to VCB Securities, there were only 18 M&A deals in 2005, valued at $61 million, but the figure rose to $10.2 billion in 2017.
In 2015-2017, the number of supermarkets, hypermarkets and shopping centers saw a CAGR of 36.8 percent, compared to 16.2 percent in 2012-2014.
The number of convenience stores began soaring in 2015-2016 with the growth rate of 78 percent per annum. However, growth slowed in 2017 to 16.5 percent.
|The M&A wave in the retail industry in early 2016 has become stronger in recent years. According to VCB Securities, there were only 18 M&A deals in 2005, valued at $61 million, but the figure rose to $10.2 billion in 2017.|
Accounting for only 0.4 percent, according to Euromonitor, a market analysis firm, of total sales only, this type of retail saw the sharpest growth rate, with CAGR of 48 percent in 2012-2017.
The impressive growth rate has lured international retail brands, including Family Mart, Circle K, Shop&Go, B’s Mart and GS25. Meanwhile, domestic brands such as Vingroup and MWG struggle to obtain market share with Vinmart+ and Bach Hoa Xanh chains.
However, analysts commented that there is pressure on the convenience store business model because of the high number of existing retail points of sale. Convenience stores have to compete with supermarkets and traditional markets.
Foreign retailers, when setting foot in Vietnam, all announced ambitious plans of opening many shops but the number has remained modest.
Consumer credit growth
The development of the retail industry is supported by many factors.
The income per capita has been increasing rapidly with 40 percent of population expected to join the middle class by 2021. Family total expenses are predicted to increase by 11.4 percent in 2017-2021, according to Euromonitor.
The retail market is expected to continue expanding thanks to urbanization while consumer credit has also been increasing steadily. By the end of the first half of 2018, consumer credit accounted for 18 percent of total outstanding loans.