A worker stocks shelves at a supermarket in Hanoi (PHOTO: BLOOMBERG)
Local retailers may be far ahead of their foreign rivals in terms of number of outlets, but insiders admit this does not translate into market dominance.
Local retailers sell good quality products at reasonable prices but make no other effort to attract or keep customers, Tuoi Tre newspaper quoted Nguyen Thi Anh Hoa, director of Dong Hung Co. which owns supermarket chain Citimart, as saying.
This is seeing them lose out to foreign chains who have been launching promotions and offering better service to customers. The latter's business has been growing rapidly and local retailers should try and keep pace with them, she said.
As more Vietnamese shoppers, especially those in the cities, opt for supermarkets and shopping malls rather than traditional wet markets, the sector have seen a rapid growth rate and high potential for modern retail outlets to develop further.
According to a report by Savills Vietnam last month, the number of trade outlets increased 25 percent compared with 2010, reaching approximately 970 outlets in 36 cities of Vietnam.
Vietnamese names dominate in terms of outlets, with Co.opMart being the largest with 61 supermarkets and 55 foodstuff stores nationwide.
It plans to open 10 more supermarkets this year and hopes to take the total number to 100 in the next two years.
Vinatexmart, another major retailer, has 81 supermarkets and clothes stores.
Opening outlets is one way of being competitive but they need to do more, Vinatexmart deputy head Tran Thanh Nhan said.
Foreign retailers have much fewer outlets French supermarket chain Big C has 21 while Germany's Metro Cash & Carry has 19 but they are larger and more modern.
Vietnam's strict regulations for foreign retailers mean they make full use of their opportunity if they manage to get a license, the managing director of a foreign-owned supermarket, who asked for anonymity, said.
Phan Duc Binh, general director of local retail and asset management company ORC, expects Vietnamese retailers to face difficulties in the long term.
Many have been beaten to prime sites for outlets by foreign competitors due to their lack of financial capacity and experience in negotiating, he said.
The competition has heated up since last year, three years after Vietnam allowed foreign retailers to run their own business under World Trade Organization commitments instead of having to tie up with local partners, Binh pointed out.
South Korea's Lotte Mart last year bought up the 20 percent stake held by a local company in its joint venture.
The giant retailer now plans to double the number of outlets it had originally envisaged by 2020 to 60.
Laurent Zecri, general director of Big C, recently said his company would push ahead with expansion, opening more large supermarkets, since the Vietnamese market is promising.
Modern retail outlets only account for a fifth of the VND2,300 trillion (US$111.36 billion) market yet.
Japanese retailer Aeon said it plans to build a 70,000-square-meter shopping mall in Hanoi later this year at a cost of $100 million. It has two other properties under construction.
French retailer Auchan recently announced a $500-million investment in Vietnam.
Foreign enterprises have advantages over their local rivals like management and logistics experience, Nhan of Vinatexmart said.
But realizing this, local players like Vinatexmart, Co.opMart, and Citimart have been working on improving operations including customer service, he said.
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