Tuesday, July 20, 2010

“Big fish” eye domestic retail market cautiously

 Photo from Internet
Secretary General of the Vietnam Retailers’ Association (VRA) Dinh Thi My Loan believes that big international retailers have not arrived in Vietnam because they are evaluating the market thoroughly to jump in at a suitable time.
Vietnam officially opened its retail market to foreigners a year and a half ago. Contrary to all predictions, big retail groups have not landed in Vietnam. For instance, Wal-Mart and Carefour have stayed outside Vietnam, even though analysts agree that Vietnam is a retail market with great potential.
According to Loan, there are many reasons. The global economic crisis has made foreign investors cautious about penetrating Vietnam’s retail market. Also, Vietnam’s market has always been listed among the top 10 most attractive emerging retail markets, but indices like purchasing power and infrastructure condition force foreign investors to wait for a good time to enter the market.
“This means that foreign investors are still taking no action and awaiting a reasonable moment to penetrate Vietnam’s market?” asked a Thoi bao Kinh te Vietnam journalist in a recent interview with Loan.
She responded that “No, they are not taking no action. They are learning and seeking to understand Vietnam.”
Loan believes that many foreign investors will join the market in the time to come, because Vietnam has one of the world’s most attractive and potential markets.
Over the last 1.5 years, Vietnam’s retail market has changed dramatically, especially in strong development of modern retailing modes. Besides supermarkets, which are now familiar to Vietnamese people, other modes of modern retailing such as shopping centres, shopping malls, specialized shops and online shopping have also developed rapidly.
Loan pointed out that, despite big difficulties during the global economic crisis, Vietnam’s retail industry still obtained the very encouraging growth rate of 16 percent, not counting price increases.
She explained that domestic retailers have been readying for fierce competition when foreign retailers arrive. Saigon Co-op Mart, for example, has been trying to expand its network, planning to set up retail points in the north. Meanwhile, northern retailers like Hapro and Citimart have also been expanding their networks southward.
Loan admitted that the shortage of suitable retail premises remains the biggest problem for domestic retailers. It is now very difficult for small enterprises to locate a space, because all of them have high prices.
Not only small enterprises, but even large leading retailers like Saigon Co-op, Hapro and Nguyen Kim, according to Loan, are facing such problems in locating retail spots.

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