Young population and increasing middle class have made Vietnam one of the most attractive emerging retail markets.
According to a recent report by global real estate service firm JLL Vietnam, investors from Japan, Thailand, France and South Korea have flocked to find opportunities in Vietnam. Thai firm, Berli Jucker Plc bought Metro Cash and Carry Vietnam for EUR655m, making it the biggest merger and acquisition transaction in 2014. Not long later, another big player from Thailand, Central Group also acquired Nguyen Kim electronics chain and then the Big C Supermarket.
In 2015, South Korea’s top retailer Emart discount store chain was opened in Ho Chi Minh City. Meanwhile, another supermarket brand from South Korea, Lotte, has successfully opened 11 supermarkets and aims to increase the number to 60 by 2020.
After two years joining the retail market, Japan’s Aeon Mall now owns four shopping malls, nearly 50 shops and said it expected to open 20 shopping centres in Vietnam by 2020. France’s AuchanSuper also decided to expand the business by opening 17 supermarkets in Ho Chi Minh City and 20 shops in the northern region by 2020 after the success of its three Simply Mart stores and assessing the potential growth of local retail market.
As incomes per capita increases, locals now can afford to spend more, and Gap, Mango and Topshop are becoming more familiar with young people. In early September, Zara opened its first flagship store in Ho Chi Minh City and H&M is said to be completing procedures to enter Vietnam early next year.
The report pointed out that Vietnam’s retail market has lots of room for growth with people aged 15-64 accounting for 70% of its 90 million population. From 2015 to 2020, its urban population is predicted to growth by 2.6%, one of the highest growth rates in the region.
Trang Bui from JLL Vietnam said, “Vietnam is the most dynamic emerging economy in South East Asia thanks to its increasing disposable incomes, rapid urbanisation and rising living standards."
American consulting firm Boston Consulting Group also assessed that the middle and upper classes will double in size by 2020. People with monthly incomes of over USD714 are the main target of retailers. In addition, credit cards have become familiar with the public and consumers are less worried about spending more. Increasing international tourists and better infrastructure are also important factors to attract investors.
“The competition has become increasingly fierce and only retailers with right strategies to meet market demand will gain greater market share," JLL wrote in its report.
Source: Vietnam Net Bridge