The Hanoitimes - The Vietnam’s retail market set objective of reaching 200 billion USD revenue in 2035. However, experts said there must be solutions and clear strategy for domestic retailers to realize and taking advantages of this huge potential market.
Currently, the Ministry of Industry & Trade is taking opinions from related administrative agencies with regard to the Strategy to facilitate trade until 2025, with vision until 2035, as the objective of revenue for the retail sector by 2025 to reach 485 billion USD and increase to 200 billion USD by 2035.
According to this strategy, specific objectives from now on until 2025 are as follow, GDP in trade sector by 2020 to reach 18,5 billion USD and by 2025 to reach 30 billion USD, in turn contributes 15.5% for GDP by 2025.
Vietnam’s retail sector set to become hundreds billion USD market.
As such, the average growth rate of total retail revenue and consumer service from now on until 2020 is 13% per year, while for period 2021-2025 is 14% per year. By 2020, it is estimated that the total revenue of retail and consumer service to reach 25 billion USD, and by 2025 to reach 48 billion USD.
Meanwhile, the domestic sector is contributing 80% of retail revenue, while the FDI sector holds the remaining 20%. The percentage of retail revenue through e-commerce by 2020 is expected to be 30%, which is equivalent to 7.4 billion USD; by 2025 to reach 35% and 2035 to reach 50%.
Besdies, there will be multiple business models with the development of e-commerce, which is expected to have 60% of small and medium enterprises (SMEs) to take part in e-commerce. Along with this, the system of urban trade will be finalized in equivalent to ASEAN4. The strong development of e-commerce will set target of 80-90% SMEs to join e-commerce.
The Vietnam’s retail market is considered to be attractive, evidenced by the fact that Vietnam is the world’s 6th in accordance with the Global Retail Index 2017 issued by AT Kearney. In reality, Vietnam has potential to become ideal destination for retailers with the strong belief of customers, the booming of e-commerce, free trade and the continuing improvement of infrastructure.
According to the Director of Savills Vietnam Mathew Powell, the Vietnam retail market still has room for development, as the retailing density in Hanoi and Ho Chi Minh city are quite low, which is at 0.26 and 0.12m2 retail per person comparing to other cities in the region such as Bangkok, Singapore and Kuala Lumpur.
Despite the huge potential, Mathew said, what the Vietnam’s retail market needs are not only the quantity, but also the quality of retailers and as such, they have to quickly adopt to new trend in the market. With this being said, this will be a good timing, as customers in retail sector are changing everyday; in future, this will be the era of technologies, smart phones and facebook. Retailers will have to transform continuously to catch up with new trends, or risk of being left behind in this huge potential market but also with fierce competition.