Convenience stores still popping up everywhere
With average annual growth rate of 10 percent and revenue of $150 billion in 2018, the Vietnamese retail market is full of potential, especially for convenience stores.
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2018 witnessed unprecedented strong development of modern retail channels.
On the last day of the year, VinMart+, the convenience store chain belonging to VinCommerce, a subsidiary of the conglomerate VIngroup, opened 117 points of sale in many cities and provinces, raising the total number to 1,700.
The Bach Hoa Xanh chain of The Gioi Di Dong JSC ended the year with 405 POS opened.
Saigon Co.op in 2018 had many more Co-op Food points of sale. Its Cheers and Co.op Smile chains also expanded their networks. VinMart+ strives to have 5,000 POS by 2021 with turnover increasing by eight times compared with 2017 to $3.7 billion.
While Vietnamese owned retail chains have been expanding, foreign retailers have been penetrating Vietnam’s market. They included GS25 from the Republic of Korea and Fujimart from Japan.
Soon after arriving in Vietnam, foreign retail chains all announced their expansion plans. GS25 plans to open 2,500 shops within 10 years. 7-Eleven, which came to Vietnam in 2018, announced it would have 100 shops in Vietnam after three years of operation and 1,000 shops in 10 years.
The Trade Research Institute, an arm of MOIT, estimates that Vietnam’s retail growth rate in 2016-2020 will be 11.9 percent per annum and the market value will reach $180 billion in 2020.
It is expected that by 2020, Vietnam would have 1,200-1,500 supermarkets, 180 commercial centers and 157 shopping centers. There are more than 3,000 convenience stores in Vietnam.
Nielsen Vietnam said there has been a strong rise in convenience stores and mini marts in the last few years. Circle K, FamilyMart, B’s Mart, 7-Eleven and GS25 have expanded POS by four times as of September 2018.
Nielsen’s report released in November 2018 showed that Vietnamese shop at convenience stores four or five times a month, much more frequently than eight years ago. This is the fastest growing shopping channel in the last eight years.
However, Nguyen Thi Thu Trinh, deputy CEO of Sai Gon Food, which sells goods via many retailers, said many shops have opened, but many have shut down.
The biggest obstacle that hinders the expansion of convenience store chains is the lack of business premises. The high rent eats into retailers’ profits.
According to Do Quoc Huy, marketing director of Saigon Co-op, it takes convenience stores three to five years to begin reaping fruit, and retailers need to have at least 500 retail shops to optimize their operation costs.
