Vietnam retail market abuzz with expansion plans

TN News

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The big names like Wal-Mart and 7-Eleven might be missing, but they are not missed.

Retailers who have already managed to gain a foothold in the Vietnamese market are very busy working to expand and strengthen their presence here as forecasts predict a fast-paced growth for the sector through 2014.

Duong Quynh Trang, public relations manager at Big C did not reveal concrete expansion plans for the French-invested supermarket chain, but she said more outlets will be launched. The retail chain now has 14 outlets in the largest cities in the country, five of which were opened this year.

South Korean retail giant Lotte has been looking for new store locations in Vietnam as it targets a total of 30 supermarkets in the country. The company currently operates two outlets, both in Ho Chi Minh City.

Also engaged in expansion plans are Germany-headquartered Metro Cash & Carry and Malaysian retailer Parkson.

Nguyen Ngoc Hoa, chairman of local retailer Saigon Co.op, said although Vietnam has restricted expansion by foreign retailers, they can dodge this easily by forming joint ventures with local firms or through franchising.

Local retailers are under a huge pressure as the competition grows tougher, Hoa said. His company operates a chain of around 50 supermarkets and many food stores around the country.

Worries about a "foreign invasion" started doing the rounds two years ago when the country opened its retail market. The fears have not been realized yet. Big names like Wal-Mart, Tesco and 7-Eleven have not made an appearance, and traditional mom-and-pop stores are still very popular.

The absence of the mega multinational corporations, however, does not say anything about the market's potential.

Vietnam's retail sales in the eleven months ending November increased by 25 percent compared to the same period last year, according to the General Statistics Office in Hanoi.

PricewaterhouseCoopers said in a report on December 13 that Vietnam is a "rising star" with the retail and consumer market growing over 10 percent annually until 2014, 4 percent higher than the average growth projected for the fast expanding Asia Pacific region.

As the market continues to grow, existing players are bracing themselves for tougher competition.

Channel News Asia reported on Monday that Saigon Co.op was partnering with Singapore supermarket chain NTUC FairPrice to set up a hypermarket chain in Vietnam.

The first hypermarket under the joint venture is expected to be operational by 2012. NTUC will help leverage Saigon Co.op's network of supermarkets as well as its large customer base, the report said.

Japanese convenience store operator Ministop has big plans as well. The subsidiary of Japanese retail giant Aeon has been reported to be planning for a chain in Vietnam. The company has signed an agreement with G7, a unit of Vietnamese coffee producer Trung Nguyen, to implement its plan. The first Ministop store is expected to open in Ho Chi Minh City in May 2011, followed by 100 others in two years.

An expert with the Vietnam Retailers Association who wished to stay unnamed said it would not be easy for local companies to take the fight head-on against foreign rivals, who have more experience and capital. The best way is to cooperate with foreign partners, the expert told Thanh Nien.

"Local companies have certain advantages including understanding the market, already having retail chains and knowing more about government policies. These are the weaknesses for foreign retailers... So, it will be a win-win situation if they work together."

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