Numerous foreign giants withdraw from Vietnam’s retail market

Many foreign brands faced difficulties and struggled to compete in the Vietnamese retail market and had to withdraw. The market recorded many retailers closing, returning rent facilities, or downsizing their businesses.

In mid-May, The Korea Times reported that the Korean hypermarket Emart will transfer the franchise to Truong Hai Thaco Automobile Group in the near future.

Facing many obstacles in expanding operations in the Vietnamese market, after more than 6 years of opening a hypermarket, this brand has not been able to open any more points of sale, partly due to the large retail supermarkets model requires large space.

The market has witnessed many businesses having to close, returning rent facilities, or downsizing their business models

According to experts from Savills, this is not the first time that a foreign brand has faced difficulties and struggled to compete in the Vietnamese retail market.

Previously, the Auchan supermarket chain from France was also transferred to a local retailer, Saigon Coop, or the exit of potential corporations such as Casino Group, Metro Group…

Ms. Tu Thi Hong An – Commercial leasing director of Savills Vietnam – said: “In recent times, the effects of Covid-19 have caused quite a lot of difficulties for the real estate market, especially the real estate market. The market has seen many businesses closing, returning rent facilities, or downsizing their businesses.”

However, Ms. An believes that this is a rule of natural elimination. The retail segment in Ho Chi Minh City at the moment is still receiving a lot of foreign investment when recording many new transactions of opening a number of chain brands belonging to the food and beverage, fashion, and accessory industries, this shows that international brands still see potential in the Vietnamese market.

Savills cited that “giant” Alibaba and Baring Private Equity Asia (BPEA) have reached an agreement to spend $400 million to buy 5.5% post-release ownership at The CrownX – a consolidated retail consumer platform of Masan at Masan Consumer Holdings and VinCommerce (which owns the retail chains VinMart and VinMart+).

After this transaction, VinCommerce will be the leading grocery retailer on the Lazada e-commerce platform (also owned by Alibaba).

Although Covid-19 has forced Vietnam and many countries around the world to impose curfew orders, total retail sales and import and export activities still have positive signs in the first quarter of 2021.

An said that, despite facing the epidemic situation, retail indexes reacted contrary to the current situation of the market. Total retail sales continue to grow as e-commerce and international brands entered the market.

It can be seen that, as the line between online and offline shopping is increasingly blurred, the combination of these deals is drawing a new playing field for the Vietnamese retail market,” said Savills expert.

According to Trading Economics, retail sales are forecast to grow 11% in 2021, outpacing other Southeast Asian countries. Assessed as a potential retail market, ranked 4th in terms of e-commerce growth among Southeast Asian countries, Vietnamese household spending in 2021 is expected to increase by 9.6%, up against Fitch Solutions’ forecast of 0.5% in 2020.

Consumer spending categories are expected to continue to grow again in 2021. According to the National Master Plan for E-commerce Development 2021-2025, by 2025, there will be up to 55% population engaged in online shopping. (Translated)