Vietnam Retail Market in 2022: Potential and Forecast

Ngoc Lee
Vietnam Retail Market in 2022: Potential and Forecast
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Due to the impact of Covid-19 on all aspects of life around the world, businesses also suffered a lot of heavy losses, including the retail industry. However, it is a miracle that despite these difficulties, Vietnam retail market is still having a positive growth index and is considered a potential market. So what creates the potential of the retail market in Vietnam and what information you need to know in this regard.

Vietnam Retail Market: A Comprehensive Overvew 

During the forecast period from 2021 to 2026, the Vietnamese retail market is expected by experts to grow at a rate of more than 10% CAGR.

Overview of the Vietnamese Retail Market
Overview of the Vietnamese Retail Market

While the corona virus situation is still evolving internationally, Vietnam's effective containment of the pandemic has led to a resurgence in consumer goods and services retail sales in the final months of the year. The pace of growth, although lower than the previous year's 12.7%, is an upbeat sign for the corporate environment as the retail industry worldwide suffered a drop in revenue during the epidemic. Retail sales increased rapidly at the end of the year as stores and malls launched promotional programs to boost shopping demand in the country. 

Vietnam's rapidly growing urbanization and changing needs of urban young customers are driving the significant growth of retail channels such as ease of use store chains, as well as the rapid growth of Ecommerce. Indeed, the growth of commercial forms such as mini-marts has responded to the need for food shopping in line with the flow of busy urban lifestyles, showing the increasing importance of variables. 

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Private brands/products are offered by modern retail establishments and can only be bought from one of their locations. One important reason Vietnamese people choose to shop at traditional markets is the ability to purchase items in smaller quantities. Supermarkets provide items that are more suited to the ordinary consumer's everyday requirements. 

Supermarkets also sell non-food items and household appliances, making shopping easier for customers because they have everything they need under one roof. To enhance the shopping experience, some establishments include bakeries in cafes and shops, where customers can savor products and enjoy relaxing moments with friends or family. 

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Local people's preference for brick-and-mortar stores is based on factors such as widespread nationwide availability, accessibility to consumers, and product and commodity prices. relatively lower prices (where customers can still haggle for), a better supply of fresh produce produced in wet marketplaces, and brick-and-mortar retailers that provide adjustable package sizes for daily usage.

The Report's Purpose

Retailing is the activity of consumers selling products or providing services to customers with a need for profit through a variety of distribution channels. A thorough background study of an evaluation of the Vietnamese retail market including an assessment of development trends by segment and changes in customer demand, notable changes in the market overview and market dynamics. school. 

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Vietnam's retail market is divided into product categories including Food, Beverage, Personal and household care, Clothing, Accessories and Footwear, Industrial, Furniture Automotive and Motorcycles, Household Electronic Appliances, and many more Products and Distribution Channels such as Supermarkets, Department Stores, Convenience Stores, E-Commerce and Other Channels of Distribution. 

- Read More: Vietnam Furniture Market In 2022: Overview and Forecast 

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Important Market Trends

Fast Consumer Spending Growth is a Key Driver

Vietnam's total retail sales of goods and service in 2020
Vietnam's total retail sales of goods and service in 2020

Per capita income in Vietnam is expected to grow rapidly, possibly reaching USD 3,062 by 2023. Vietnam's overall rising consumer spending is growing at the fastest rate in Southeast Asia, increasing by more than 8 % per year, from $118 billion to $185 billion between 2013 and 2019. Private spending accounts for more than 67 percent of the country's GDP. 

This is the region's second highest in the South Asian region, after only the Philippines (73.8 percent) but ahead of Indonesia and Malaysia (57.3% and 57.0% respectively).

Low Urbanization and High Growth Potential

Vietnam's urbanization rate remains low compared to the rest of the region, with a rate of 36.63% of the population, ranging from 47 to 76 percent in other Southeast Asian countries. This shows that this country still has a lot of potential to exploit. 

In fact, the urban population of Vietnam is forecast to grow at a CAGR of over 3% by 2025, while Thailand, Indonesia, the Philippines and neighboring countries are forecast to grow at a faster rate. 1% by 2025. 

According to the report on the urbanization rate of countries in Southeast Asia, the first phase of urbanization is predicted to be intense. Vietnam's growth follows a similar pattern, with urbanization expected to rise to 55% by 2030 - a potential figure.

Competitive Environment

The report points out that when looking at the top foreign companies in the retail business in Vietnam, there are not many large players dominating the industry when it comes to market share yet. However, thanks to technical innovations and breakthroughs in product features, small to mid-sized businesses are attracting more customers thereby expanding their market footprint by gaining new contracts and entering new areas. 

Therefore, this will be a highly competitive environment, requiring business owners to have specific strategic plans to achieve future success when investing in the Vietnamese retail market.

Key players in Vietnam's retail market

Currently, Vietnam has 5 retail companies with the largest scale and sales, which are:

  • Central Group
  • Saigon Co. Op
  • Vingroup
  • Lotte Mart
  • AEON group

This also shows that this is not an easy market, but with effective strategies and smart investments, Vietnam's retail market is definitely one of the most potential markets in the region and in the world.

Keeping the Retail Industry Growing

According to Vietnam's official data, the retail business in Vietnam has grown significantly in the first 5 months of 2021. From January 2021 to May 2021, the retail industry achieved a revenue of 1.67 billion dong, up 7.8% y/y in 2020. This rapid development indicates that the massive growth is warranted to be sustained even during the outbreak of the pandemic. All are skillful commands as well as policies to help enterprises of the Vietnamese state. 

This expansion of the Vietnamese retail industry is forecast to continue through 2021 and beyond, as early projections suggest that customers will be willing to continue spending in the retail market. According to Mordor Intelligence, Vietnam is currently one of the countries with the highest total consumer spending in Southeast Asia. 

Total consumer spending increased from $118 billion in 2013 to $185 billion in 2019, achieving a growth rate of more than 8%. As a result, Vietnam's retail market is expected to grow at a CAGR of 10% in the period 2021-2016.

The Retail Industry is Being Digitized

The Retail Industry is Being Digitized
The Retail Industry is Being Digitized

Societies are undergoing great change, transitioning to the fourth industrial revolution (4IR). And so, a number of countries in Southeast Asia are following the trend of the times, including Vietnam. As stated in the Unified Strategy for the Fourth Industrial Revolution for ASEAN, one of the key keys to a successful transition to the 4IR is the use of digital technology. In the context of the retail industry, Vietnam has been taking advantage of capital and investments from outside. 

Since then, I have witnessed first-hand the benefits that technology can bring in retail as well as in other industries. Digitization of the retail industry is most easily seen through e-commerce. While it is an industry on its own, there is an overlap as many brick-and-mortar retailers that enable online also become e-commerce sellers. 

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Indeed, according to published data from the Vietnamese government, the e-commerce industry in 2020 will increase by 18%, reaching a revenue of 11.8 billion USD, accounting for 5.5% of the total retail revenue of the country. Moreover, according to Statista, Vietnam's business-to-consumer (B2C) e-commerce field is expected to reach $12 billion in revenue in 2021 alone. 

These figures show that Vietnam retail Market will only continue to grow in the coming years due to two important factors: (1) a strong increase in people's shopping demand and (2) increased consumption of goods. digitize to maximize reach and increase reach.

Ngoc LeeNgoc Lee is an Content Creator Manager at EFEX. She wields her long-term expertise in Logistics and Supply Chain, harnessing her top-notch writing and research skills to bring incredibly valuable content. Whether you're a small startup or a well-established enterprise, Ngoc Lee is here to equip you with the essential knowledge of e-commerce, fulfillment, and all things business-related.