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ECONOMYINDUSTRY

Vietnam sees highest ranking in history of 2017 Global Retail Development Index

Updated at Monday, 05 Jun 2017, 16:26
The Hanoitimes - Vietnam has jumped five spots to sixth place in the Global Retail Development Index (GRDI), released by management consulting firm A.T. Kearney today.
The GRDI, now in its 16th edition, ranks the top 30 developing countries for retail investment worldwide.
The Index analyses 25 macroeconomic and retail-specific variables. The study is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential.
Vietnam’s jump in the ranking in driven in part by liberalised investment laws that have helped boost
Vietnam’s attractiveness to foreign retailers. The government has allowed 100 percent ownership by foreign retailers since 2015, and a favorable policy continues to attract them. This is demonstrated by the 12.5 percent growth in foreign investment in 2016. A recently concluded free trade agreement with
the European Union is expected to further boost investments in Vietnam.
“Vietnam’s moment seems to have finally arrived. The economy is shifting toward more privately owned businesses and higher-value exports, which are expected to boost incomes and consumption in the long-term. With favorable government policies, a growing and young urban population and middle class, and strong GDP growth estimated at 6.6 percent for 2017, foreign retailers have reasons to be
positive about the country,” said Soon Ghee Chua, Partner and Head of Southeast Asia at A.T. Kearney.
“However, it’s not just the higher-end of retail that is on the rise. E-commerce is also contributing, with sales expected to grow 22 percent to account for 1.2 percent of total retail by the end of 2017. Steep online discounts and promotions are driving sales for now. However, businesses will have to be careful
and devise a long-term strategy to sustain this growth without having to offer big discounts. Nonetheless, new entrants and investors are making bets on the fast-growing market,” he added.
Convenience stores and mini-marts are the fastest-growing segment. Circle K and FamilyMart entered the market in 2009 and are expanding aggressively. FamilyMart plans to have over 800 franchised stores by 2020. 7-Eleven plans to open its first Vietnamese store in 2018 in a franchise agreement with
Seven System Vietnam, with a target of opening a total of 1,000 stores in the next ten years.
Lotte Mart plans to open 60 stores by 2020. Emart, South Korea’s leading retailer, launched a $60 million shopping center in Ho Chi Minh City. Japanese retailer Takashimaya plans to open a 15,000-square-meter store at Saigon Centre in Ho Chi Minh City, its first store in Vietnam. Vietnam-based VNG Corporation reportedly invested about $17 million for a 38 percent stake in e-commerce platform Tiki.
Asia Pacific is the most dynamic region in the Index accounting for five of the top ten countries in the Index. India leads the way with a rapidly expanding economy and a consumption boom. China, long the Index leader, drops to second place as the market matures, but the country still leads the pack in other areas, most notably e-commerce. Elsewhere in the region, there has been steady growth in modern retail, despite economic headwinds like Malaysia’s depreciating currency and Indonesia’s rising inflation. 
Tu Anh
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